Sale and rent back schemes 'desperately need regulating'

The sale and rent back sector in the UK housing market "desperately needs regulating", a charity has claimed. The Office of Fair Trading (OFT) is currently conducting a market study into sale and rent back schemes, whereby homeowners sell their property at a discount in return for the option to remain in their home as a tenant.

Controversy has surrounded the schemes with consumer groups cautioning that some homeowners who take up the offer are offered little protection from rent increases and the prospect of being effectively forced out by their landlord.

Responding to developments, the Homeowners Advice Centre welcomed the OFT probe which it claims is required in part because the number of people opting for the scheme has increased "steeply in the last few months" thus leaving many more homeowners vulnerable to unscrupulous investors.

A spokesman said: "I estimate 95 per cent of all companies advertising on the internet and the classifieds are individual landlords or small companies looking to build a cheap buy-to-let portfolio quickly as opposed to organisations that have set out to provide long-term lets and debt relief. "I suspect that most of the smaller providers would close down or stop advertising if the OFT ensured that the lease was a minimum of 20 years and they had to have £1million in equity or liquidable assets before trading."

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