SRB providers 'have just weeks to register'

03/07/2009

A warning to sale and rent back (SRB) landlords was has been sent out by an industry group.

The National Landlords Association (NLA) pointed out that the homeowners were facing new regulations, requiring them to ask the Financial Services Authority (FSA) for interim permission to continue their business activities.

SRB works through a homeowner who is having trouble covering their mortgage repayments selling on the property to a third party - and then carrying on living there in exchange for rental payments.

The FSA officially took over regulation of this sector at the beginning of the month, following concerns that many providers could be drastically underpaying for the homes and kicking the tenants out just months after the sale.

John Socha, NLA vice chairman said: "The clock is now ticking if companies or individuals want to continue with SRB transactions.

"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, added: "It is important that consumers have confidence in the SRB landlord that they sell their house to. EuroDebt welcomes these new regulations and hope that it will enable people in genuine financial difficulty to establish an all-round debt solution that encompasses their secured debts and unsecured debts, probably through a Debt Management Plan or IVA.

"We frequently have to deal with people being threatened with re-possession or eviction, and we will explore with trusted partners a complete debt solution for both homeowners and tenants where this is appropriate. Neither homeowners nor tenants that are settled in their properties, want to have to move unnecessarily, especially if there are children involved and this creates a burden on the state."

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

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