3 tips for sale and rent back customers

4 August 2009

To let signs

Shelter is calling on struggling homeowners considering using a private 'sale and rent back' company to make sure it is regulated first, and has released three top tips for potential customers.

From now on all private sale and rent back companies must be regulated by the Financial Services Authority or they are operating illegally. Shelter is issuing urgent advice to consumers to think carefully before entering any arrangement, and to make sure their company is authorised by the FSA before signing up to any schemes.

Sale and rent back companies provide struggling homeowners with the chance to sell their home at a discounted price and rent it back. This enables people who may not wish to leave their home to remain there and become a tenant instead.

However the industry, which was not regulated until 1 July, has been plagued with rogue operators. Shelter has seen many cases where companies pay people far less than the value of the house or kick tenants out of their home at short notice despite promising them they could stay there for life.

Shelter’s three top tips

Shelter is urging people to follow these three top tips before taking up a private sale and rent back scheme:

  • Make sure sale and rent back is the best option for you by seeking independent advice. Even when it’s regulated, sale and rent back is a risky option. There may be better options such as government help. Call Shelter’s Homeowner Helpline on 0300 3300 515 to discuss with a dedicated adviser.
  • Make sure the firm is authorised by the Financial Services Authority (FSA). If they are not authorised you should not sign up with them. Check the FSA register, call the FSA helpline on 0300 500 5000 or visit the Moneymadeclear website to find out more.
  • Report rogue companies to the FSA. If you see an advert in the paper, or you are approached by a firm and they are not authorised by the FSA, be sure to let the FSA know using the helpline number above.

Sam Younger, chief executive of Shelter said: 'With 65,000 homes predicted to be repossessed this year, more and more struggling homeowners will be tempted by sale and rent back schemes in the hope they can offer a lifeline. However, we have seen many people exploited by schemes and financially worse off and vulnerable to homelessness.

'Now the new regulation is in place, it’s absolutely vital that anyone considering taking up a sale and rent back scheme takes our advice and checks the company they are thinking of using is regulated. Following our top tips will help prevent people from falling victim to a sale and rent back scam, and ultimately ensure they don’t lose their home.'