Simon Read: Sale and rent back won't be the lost dodgy money deal
Do you remember sale and rent back? Companies which flogged the deals targeted struggling homeowners with an offer to buy their home and then let them remain paying rent. They sold the deals on the promise of helping people avoid becoming homeless.
But firms paid a pittance for properties and then sold them on for a fat profit, leaving the leaseholders with no rights and at the mercy of new owners who often hiked up rents to unaffordable levels.
The City watchdog shut the industry down last year after its head of mortgage and general insurance reported: "Most firms were more focused on their own commercial success rather than the welfare of the customers."
The dodgy deals were back in the news this week after the Financial Conduct Authority (FCA) slapped salesman Gurpreet Singh Chadda with a fine of almost £1m, the largest-ever handed to a sole trader.
He was knee-deep in dodgy sale and rent back deals, arranging them for his customers but ripping them off by lying about the values of their homes. He also claimed he was buying them when, in fact, other people were. The watchdog said: "Chadda's misconduct is the most shocking we have seen from a home finance arranger."
It may be the last we'll hear about the whole shoddy affair but you can bet your house that there are salespeople up and down the country looking for fresh ways to fleece us. The challenge for the FCA is to spot the new dodgy deals before they claim victims.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
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