Call for urgent rules on sale and leaseback

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The Independent Online

Citizens Advice, the independent consumer group, has called for the urgent regulation of residential sale and leaseback schemes, after a sudden surge in their popularity has left thousands of elderly people in danger of being made homeless.

The call comes in an ITV documentary, from the Tonight with Trevor McDonald series, to be aired this evening, and features a number of stories of elderly people who have already been persuaded to sell their property for much less than its market value, while sometimes receiving no guarantees that they will be able to rent their property for the rest of their life.

The documentary claims more than 200 companies offering residential sale and leaseback schemes have sprung up over the past couple of years, some offering owners as little as 60 percent of the value of their properties.

Unlike equity release schemes, residential sale andleasebacks are not regulated, as they are considered to be a straightforward property sale. However, as well as losing out on the full value of their home, many customers are roped into signing up to short-term rental contracts, which could see them being forced to leave their home within a year of the deal.

Peter Tutton, a social policy officer at Citizens Advice, says: "We've got people who are vulnerable trying to stay in theirhome being enticed into an industry that has no controls on it and that is a disaster waiting to happen.

"Unless something is done to bring this industry into some kind of regulation, to get some sort of framework of quality and assurances for people entering into these agreements we could see a lot more people really finding they are losing out lots of money and still losing their homes."

The programme features one homeowner, 61-year-old Michael Stokes from Wolverhampton, who recently agreed to one of the schemes as he was struggling to keep up with his mortgage payments after his wife died, and was facing repossession. "It was like somebody throwing me a life belt when I'm drowning," he told the programme.

"I was losing my house, I'd lost my wife. Well, I thought to myself, some money is better than none." But the company paid him less than two-thirds of his house's market value, and only offered him a 12- month rental agreement.