• Welcome to the LegalBeagles Consumer and Legal Forum.
    Please Register to get the most out of the forum. Registration is free and only needs a username and email address.
    REGISTER
    Please do not post your full name, reference numbers or any identifiable details on the forum.

OFT states "Sale and rent back sector" requires Regulation

Collapse
Loading...
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • OFT states "Sale and rent back sector" requires Regulation

    Sale and rent back

    15 October 2008

    The OFT has recommended that the sale and rent back sector needs statutory regulation with better protection for consumers. The OFT's report says that:
    • some consumers enter into sale and rent back transactions when it might not the best option for them
    • some sale and rent back firms may mislead customers as to the value of their property or the security they have as tenants. This includes telling people they will be able to stay in their home for years, when in reality the tenancy may only be guaranteed for six to 12 months
    • there are examples of firms imposing substantial rent increases or even evicting tenants after a short tenancy period. It is also possible that tenants may lose their homes if the landlord defaults on the mortgage, and
    • some consumers may be evicted because they cannot afford the agreed rent, which suggests staying in their property may not have been sustainable in the first place.
    As a result, the main recommendation of the OFT report is that there should be statutory regulation of the sale and rent back sector by the Financial Services Authority (FSA). The details of regulation will be up to the FSA to determine but the OFT considers it should include:
    • an obligation on sale and rent back firms to be more transparent about the initial valuation and sale price, the terms of the tenancy and the amount of rent to be paid. In particular, firms must offer forms of tenancy that match the assurances they give to customers, and
    • a requirement of firms to tell consumers about the free, independent advice available to them before they decide to sell.
    Regulation that may also require firms who fail to honour their commitments to offer redress to consumers.

    Consumers who are concerned about whether sale and rent back is the right product for them should seek independent advice. They may wish to contact an organisation such as their local Citizens Advice Bureau. Consumers who are concerned they have been unfairly treated by a company offering sale and rent back can contact Consumer Direct (tel: 08454 04 05 06).
    See press release.

    Download Sale and rent back - an OFT market study (pdf 494 kb).

    Annexes - all pdf files
    14 May 2008
    The OFT announces the launch of a market study looking at sale and rent back arrangements.
    See press release.

    Sale and rent back (also known as sale and lease back) arrangements involve individual homeowners selling their property at a discount in return for the option to remain in the home as a tenant. These arrangements may be taken up by consumers in financial difficulty facing possible repossession of their homes.
    Sale and rent back is a relatively new market which appears to be growing quickly. There is little detailed information about the size of the sale and rent back market at present, but going forward if the number of repossessions increases, it is possible that take up of sale and rent back arrangements will also increase. Given the current economic climate, the OFT considers it is timely to launch this important market study now.
    The OFT will take a detailed look at the characteristics of the sale and rent back product and the circumstances in which these products are sold. The OFT also intends to collect further evidence on homeowners' experience of sale and rent back arrangements and consider whether it is likely that homeowners entering into such arrangements are making informed choices.
    If the OFT concludes that existing consumer protection is not sufficient in this area, it will consider whether further action is appropriate, including recommending that consumer protection should be strengthened in this area.
    This market study is designed to be a short study focused tightly on the sale and rent back product. The OFT will publish the report of its findings on completion of the market study. This is currently expected to be in September this year. However, we will monitor the market closely and may accelerate the work if these practices appear likely to give rise to significant consumer detriment in the short term.

    Source:The Office of Fair Trading: Sale and rent back

    Questions and Answers(updated 15/10/2008): http://www.oft.gov.uk/shared_oft/rep...salerentqa.pdf

    OFT sale and rent back study: http://www.oft.gov.uk/shared_oft/rep...on/oft1018.pdf

View our Terms and Conditions

LegalBeagles Group uses cookies to enhance your browsing experience and to create a secure and effective website. By using this website, you are consenting to such use.To find out more and learn how to manage cookies please read our Cookie and Privacy Policy.

If you would like to opt in, or out, of receiving news and marketing from LegalBeagles Group Ltd you can amend your settings at any time here.


If you would like to cancel your registration please Contact Us. We will delete your user details on request, however, any previously posted user content will remain on the site with your username removed and 'Guest' inserted.
Working...
X