Regulator announces new tenant protection

04/06/2009

The financial regulator has announced new plans for sale and rent back (SRB) customers.

According to the Financial Services Authority (FSA), tenants will gain extra "protection" from them in the future.

The Treasury announced earlier this week that it would allow the FSA to take direct regulatory control of the SRB sector - a power it had not had before.

SRB works through a firm buying a property from a homeowner who is struggling with their mortgage repayments at a reduced price.

They are then allowed to continue living in the property as tenants, paying rent to the new owner.

The sector has proved controversial recently, with claims that some homes were sold for much too low a price and that some customers were evicted mere months after signing the deal.

Moreover, the Office of Fair Trading (OFT), said last year that SRB firms harmed customers - and an FSA poll shows that six in ten people were not aware that the sector is currently unregulated.

Ed Harley, FSA head of mortgage policy, said: "We know that some consumers enter into SRB arrangements without understanding the costs and risks involved.

"This can be a source of real distress for people in already difficult circumstances. Firms entering our regime will need to run their business in a way that means customers are treated fairly."

Tags; Housing Debt and Bills, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle,

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