People who choose to enter into sale-and-rent-back property arrangements will find that they have greater protection under new Financial Service Authority rules.
For starters, the FSA says that it will ban "exploitative" and "emotive" advertising of the schemes, under which individuals sell their homes to a company on the understanding that they will be able to continue to occupy the property as tenants. The schemes have been roundly criticised by consumer groups for paying under market value and for instances where the former owner has been given notice to quit by their new landlords soon after the sale had gone through.
To counteract this, in future, the FSA says that sale-and-rent-back tenants should automatically be entitled to live in the property they have sold for a minimum five years as a tenant, provided they pay their rent. To prevent people entering into sale and rent back too lightly, the FSA will also ban cold calling and door-to-door leafleting. "With cases of vulnerable homeowners evicted from their homes six to 12 months after selling to unscrupulous sale-and-rent-back companies, tighter controls were vital," said Lesley Titcomb, the FSA director responsible for the mortgage sector. "The process is often used by those who want to sell in a hurry to stay in their home, and so it is vital that they are better protected during a difficult period financially."Reuse content