NASARB welcomes OFT investigation

Wednesday, 19, Mar 2008 11:29

The National Association of Sale and Rent Back (NASARB) has welcomed the announcement that the industry will be investigated by the government.

Presenting his first Budget last week chancellor Alistair Darling confirmed the industry would come under review by the Office of Fair Trading (OFT).

This is a move the NASARB has welcomed; with a hope it could improve the sector's image.

A draft code of practice for sale and rent back is already in development, with a view to publication towards the end of April, which will have at its centre an impartial form of redress with sanctions for providers who fail to comply.

Furthermore, the National Landlords Association (NLA), on behalf of the NASARB committee, continues to be in detailed discussions with the OFT about the code of practice which will require transparency at every level throughout a transaction and afterwards.

The code will also include a requirement for the vendor to prove they have taken legal advice or to sign a waiver indicating they do not require such advice.

This will help to ensure that potential tenants make a fully-informed decision.

"We are pleased the OFT is going to be looking into the practices of sale and rent back providers, the majority of whom provide owner-occupiers with their only opportunity to stay in their home as an alternative to imminent repossession," said John Socha, NASARB committee chairman.

"Regrettably some providers have been targeting and abusing unwary and vulnerable consumers."

It is hoped the OFT investigation and new code of practice will put an end to malpractice in the sector.

"We are now very close to publishing a comprehensive code of practice which is independent from any one group of sale and rent back providers, is squarely focused on protecting the financially vulnerable and will ensure that compliance with the code is transparent," continued Mr Socha, who is also vice chairman of the NLA.

The new code of practice will also protect business interests in the industry, as well as the consumer, details the NASARB.

"If the draft code of practice is satisfactory to the OFT, then there will be no reason why the good, smaller sale and rent back operator should be squeezed out of the market by the larger property investors in a similar way to what has happened in the equity release market," concluded Mr Socha.