Brown announces sale and rent back probe
Sale and Rent Back: Brown brings forward investigation
Wednesday, 14, May 2008 03:07
Gordon Brown announced an investigation into the controversial sale and rent back sector in the draft Queen's Speech today.
The move could see the practice - where people sell their homes to a firm, often at a great discount, and then rent them back - falling under firmer regulation.
Gordon Brown said today in parliament: "We will look at whether further action is required in light of the study by the Office of Fair Trading (OFT) into the sale and leaseback market and the rise in second charge mortgages to ensure consumers are treated fairly."
As the economy slows and household budgets are squeezed by high food, fuel and energy prices, not to mention the credit crunch making standard borrowing harder, the sale and rent back sector is growing quickly.
If repossession levels rise greatly, the OFT warns that the take-up of sale and rent back arrangements could increase further.
The sector has fallen under scrutiny with incidences of people being offered massive discounts on their homes and being forced out of their homes after initial tenancies expire.
John Fingleton, OFT chief executive, said: "Sale and rent back schemes might be helpful for some consumers but there are a number of potential concerns including whether consumers in difficult circumstances are making well informed choices.
"We are therefore prioritising this work to take a good look at whether consumers are adequately informed and protected."
Details of the consultation and how to be involved are available on the OFT website.
Daniel Barnes