New regulations arrive for sale and rent back

01/07/2009

New regulations for the sale and rent back (SRB) sector come into effect today.

The Financial Services Authority (FSA) will now oversee the sales, imposing tighter controls than before in order to better protect customers.

SRB works by a customer who is struggling to pay their mortgage selling their home to a third party and then carrying on living in the property in exchange for rent.

Consumer groups have complained that the lack of regulation in the area has led to abuses from some buyers, with tenants evicted mere months after making the sale.

Commenting on the FSA changes, John Socha at the National Landlords Association said: "In the current economic climate, more and more people will be facing financial difficulty including keeping up their mortgage repayments. Although sale and rent back will not stop repossessions, ethical sale and rent back could be a way for homeowners to remain in their properties but become tenants."

Kevin Still, EuroDebt director, commented: "As a Debt Management Company, EuroDebt sees many homeowner cases where SRB may be preferable to property re-possession or a means of achieving a clean break. The challenge is ensuring that client's use ethical providers.

"We welcome the regulation of this sector and would look to work with leading providers to provide effective debt solutions that are accessible to the tens of thousands of consumers that may face the threat of re-possession, where government mortgage rescue schemes are so obviously failing."

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

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