Private sale and rent back schemes
This content applies to England only.
Housing laws vary between England and Scotland. Get advice relating to Scotland
From February 3rd 2012, the market for private Sale and rent back schemes will be temporarily closed following a review by the Financial Services Authority.
The FSA found that most Sale and rent back schemes, that bought your home and rented the property back to you, were either "unaffordable or unsuitable and never should have been sold".
What are private sale and rent back schemes?
Sale and rent back schemes were typically operated by private, profit making companies.
Sale and rent back schemes – also called sale and lease back – provided struggling homeowners an alternative to repossession, but offered limited ongoing housing and financial security.
What to do if you are in a sale and rent back scheme
The Financial Services Authority (FSA) recommends that customers with existing agreements who have concerns should contact their sale and rent back provider, or seek professional advice.
Independent professional advice is advisable if you are in dispute with your provider, are worried about your scheme or think you were unfairly treated by a scheme. Use the Community Legal Services directory to find an adviser or use our directory to find face-to-face advice services in your area.
Regulation of private sale and rent back schemes
The Financial Services Authority (FSA) regulates all private sale and rent back schemes.
A system for regulating private sale and rent back schemes was introduced on 30 June 2010 following pressure by Shelter and other advice organisations. As a result, schemes have had to follow certain rules and meet certain criteria.
In March 2011, the FSA started a review of the 22 firms originally authorised to operate the schemes. Their report into the conduct of these firms identified many failings and has led to most schemes ceasing to operate for the time being.
Sale and rent back schemes stopped
From February 3rd 2012, no firms are taking on new business.
Nine firms have been operating these schemes since the Financial Services Authority started regulating schemes in 2010. Of these:
- 5 firms have now stopped doing sale and rent back business
- 3 have kept their regulatory permissions but decided not to use them for the foreseeable future
- 1 will only purchase second-hand sale and rent back contracts from other firms.
How the sale and rent back schemes failed
Common failings of sale and rent schemes identified by the Financial Services Authority (FSA) include:
- firms did not correctly assess if the schemes were appropriate and affordable, and customers were not given enough time to consider the agreement
- the key facts of an sale and rent back agreement were not disclosed in the correct order, were insufficient and not given at the right time
- agreements contained incorrect information and did not meet the FSA’s requirements for tenancy agreements
- sales processes did not allow firms to gather enough information to assess if the schemes were suitable
- financial promotions breached FSA rules.
The FSA will be working with a number of firms and reviewing their past business to ensure that customers affected by common failings are treated fairly.
