Your location: OFT report welcomed
15 October 2008
Shelter has welcomed a new report from the Office of Fair Trading that calls for regulation of ‘sale and lease back’ firms – businesses that buy properties then allow the former homeowner to stay on and rent their home.
The firms are often used by people who are facing repossession or are struggling to meet their mortgage payments. The Office of Fair Trading report found evidence of abuses in the sector, including:
- consumers entering into sale and leaseback transactions when this is not the best option for them.
- Sale and lease back firms misleading customers as to the value of their property, or the security they will have as tenants. Examples were given of people being told they could stay in their home for years, only to find the tenancy guaranteed just six to 12 months.
- Sale and lease back firms increasing rent significantly or even evicting tenants after a short period – sometimes because the firm has failed to pay to mortgage.
- consumers being evicted because they could not afford to pay the agreed rent – suggesting the transaction should never have been entered into in the first place.
The Office of Fair Trading suggested that statutory regulation of the sale and lease back sector by the Financial Services Authority (FSA) should include more transparency, and a requirement for firms to tell consumers about the free, independent advice available to them before they sell.
Shelter chief executive Adam Sampson said: ‘Shelter has been calling on the FSA to regulate sale and rent back schemes for many months, so we are delighted with this report. We now look forward to working with the FSA to help develop the regulatory framework to stamp out these terrible rip off schemes.
‘The ball is now firmly in the FSA's court and it needs to act immediately and decisively to stop any more homeowners from being robbed of their homes by these unscrupulous companies. The FSA must send clear signals that the time is up for those who prey on vulnerable and desperate people.
‘However, until regulation comes into force Shelter would like to see firm action being taken by the Government to give those who have been or could be victims of these companies immediate access to free independent advice.’
Mr Sampson added: ‘Shelter is also today calling on the Advertising Standards Authority, newspapers and all other media to stop these so called sale and leaseback companies in a clear bid to halt this misleading advertising.’
