CML joins charities in sale-and-rent-back protest

| October 25, 2007 | 0 Comments

The Council of Mortgage Lenders (CML) is working with two of the UK’s leading charities and calling for regulation of sale-and-rent-back property firms.

The homeless charity Shelter and the Citizens Advice Bureau have joined forces with the CML to urge Kitty Ussher, the Treasury Secretary, to bring sale-and-rent-back businesses under the control of the Financial Services Authority (FSA).

The three have written to the Minister outlining the dangers of such agreements, which are often taken up by vulnerable people.

The sector is growing strongly and some homeowners are selling their properties for well below market value.

The proportion paid can be as low as 60% below the market rate and vendors are typically offered no security of tenure beyond a six to 12-month tenancy.

According to Adam Sampson, chief executive of Shelter, “the actions of some companies offering ‘sale-and-lease-back’ schemes amounts to daylight robbery, leaving growing numbers of people financially ruined and homeless”.

Mr Sampson wants the government to act urgently to introduce regulation and outlaw unscrupulous practice.

The FSA has been reluctant to take up a role in the matter, stating that sale-and-rent-back did not fall under its remit, as it is a property transaction and not a financial service.

However, it can be argued that sale-and-rent-back schemes are similar to equity release home reversion products and Islamic mortgages, both of which are regulated by the FSA.

The CML also believes that with repossession set to rise, the Office of Fair Trading should be in investigating claims made by advertisements for sale-and-rent-back operators.

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