19 February 2010
Over recent years there has been a lot of concern over sale and rent back schemes, and this is where a company buys a person’s property for a percentage of the market value and then rents it back to them.
Ideally the company should rent back the property to the former homeowner for life, but often this is not the case and the former homeowners find themselves being evicted within a short period of time.
However, this could all change as a result of new regulations that are being brought in. More and more homeowners have had to turn to sale and rent back schemes as a result of being unable to sell their home during the credit crunch or because they have fallen into negative equity or are struggling to make mortgage repayments and could risk being repossessed.
The rising number of people that are now at the mercy of more unscrupulous sale and rent back companies has spurred the authorities to take action and do something about the problems that are rife in this industry.
Under the new regulations those that sell their homes to sale and rent back companies will be guaranteed at tenancy at the property for at least a five year period, which means that the company will not be able to purchase the property at a knock down price and then evict the former homeowners.
The new regulations are set to come into play in June of this year and will bring some of the unscrupulous practices that were being exercised by some of these companies to an end.
Tags: Leasehold estate, Rent control, Home insurance, real estate, Financial Services Authority, property, Loss mitigation, sale and rent back, Real property lawEd Harley from the Financial Services Authority stated: “For some people in financial difficulty, staying in their home remains very important [and] selling their home and renting it back in this way can be right for them. But we are aware of some firms exploiting vulnerable consumers at a difficult time. So, it is right that we introduce these further protections, and we will take swift action where they are not met.”