OFT demands controls on sale-and-rent-back
Sunday, October 19, 2008
The Office of Fair Trading (OFT) is to demand a crackdown on sale-and-rent-back deals in which hard-up home owners sell their property to specialist firms at a discount in return for tenancy rights. It wants the Financial Services Authority to regulate the fast-growing practice.
There are estimated to be more than 1,000 sale-and-rent-back firms, ranging from national organisations to one-person outfits, which advertise their services to homebuyers in financial problems through a mix of local newspaper adverts, flyers and door-to-door canvassing. They typically offer 20% to 30% less than the market price, promising to turn buyers or owners who have debts or other problems into tenants.
About 50,000 properties have been sold, but demand is expected to increase as the credit crisis and rising joblessness combine to put pressure on homebuyers. Buy-to-let investors often move into sale-and-rent-back as an investment in an unregulated source of property at below market value.
Read the full report at Guardian Property
Labels: credit crunch, Office of fair trading, sale and rent back deals, uk mortgage market
