A warning has been put out for older homeowners that may be looking to release equity from their homes, with officials concerned that many of these homeowners could end up at the mercy of sale and rent back operators that are nohttp://www.glitec.co.uk/wp-admin/post.php?action=edit&post=1680&message=6t operating to FSA regulations.

Whilst sale and rent back firms have been regulated since July of last year it has been claimed that there are still many companies that are operating outside of the regulations and preying on vulnerable pensioners that need to unlock cash from their homes.

Reports claim that the sale and rent back sector has shrunk to the point where there are very few affordable deals still left on the market, and this could result in homeowners that are trying to get cash from their homes being pushed into deals with unscrupulous sale and rent back firms because they do not have enough equity in their homes. This could result in some homeowners being evicted from their homes by the firms once the sale of the property has gone through.

With the traditional equity release scheme the homeowner is guaranteed to be able to stay on in the property for life should they wish to do so. However, with sale and rent back schemes once the property has been sold to the company there is no guarantee that the homeowner will be able to stay on in the property, and may find themselves being forced out by the company. With sale and rent back firms homeowners receive only around 60 percent of the property value in many cases.

One equity release advisor expressed his concerns stating: ‘Since the credit crunch, funding for equity release has all but dried up. Costs and interest rates have gone up. Most providers have dropped out of the market or drastically cut their business. Borrowers who in the past opted for equity release to pay for extras such as cruises and home improvements are staying away from the market. But I fear for those who are desperate to unlock cash from their home to supplement a low pension income. They could be forced into the hands of sale-and-rent-back firms where they will get poor value, could be ripped off or badly treated.’

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