Sale and rent back schemes are to be investigated by the Office of Fair Trading (OFT) to see if they are fair to consumers.
The schemes, where people in debt difficulty sell their home to a buy-to-let investor on the proviso they can continue to live in the property as tenants, have come to the fore in the past year as more and more homeowners struggle with their mortgage repayments. The backers of the schemes promise that homes will be bought quickly and the homeowner allowed to sign a tenancy agreement.
However, consumer groups have attacked sale and rent back on two grounds. First, the schemes often only pay around 70 per cent of the true value of the property. Second, some schemes only offer the seller a short-term tenancy agreement – six months or a year – and then evict them so they can sell on the property at a profit.
The OFT has promised a speedy investigation and plans to release its findings by September at the latest.
Some scheme providers have been calling for an industry-wide code of conduct and even regulation to help ensure homeowners are protected.Reuse content