NLA lays down sale and rent back guidelines
Wednesday, 04 Jun 2008 14:54
NLA lays down sale and rent back guidelines
The National Landlords Association (NLA) has produced a set of guidelines for use in the growing sale and rent back sector.
With UK property prices in decline and mortgage liquidity still in the doldrums, the specialist sector of the UK mortgage market is expected to expand in coming months.
In response the NLA - the leading representative body for private-residential landlords - has produced a Code of Practice for landlords involved in the market.
Although the NLA admits sale and rent back will not stop repossessions, ethical use of such schemes could be a way for homeowners to remain in their properties, becoming tenants.
At the heart of the guidelines is the protection of vulnerable consumers, with the following included:
Transparency: The NLA has called for standardised key fact documents to be provided by member landlords, allowing homeowners to compare the deals on offer. Such a document will include the level of discount being offered, all fees payable by the vendor and the actual market value of the property.
Redress: Every tenant and member landlord will be asked to access to independent dispute resolution service for cases where there is a dispute. If a member landlord breaks the terms of the Code of Practice, there could be significant financial penalties.
Raising standards: Unless the tenant breaks the terms of the tenancy agreement, the member landlord commits not to seek possession of the property using Section 21 of the new guidelines – thus making financial gain at the expense of the tenant.
Independence: Under the plans the member landlord would be required to support their own valuation with local evidence corroborating the actual market value. The vendor must also have access to independent legal advice confirming they are fully aware of the implications of the transaction and subsequent tenancy.
"Sale and rent back, by its very nature, deals with individuals who are in stressful situations making them more vulnerable to rogue operators," said
"It is of critical importance that landlords who are involved in sale and rent back approach these homeowners with the utmost professional integrity and sensitivity.
"People’s homes are not like other products and services and we must act now to ensure these vulnerable consumers are protected from rogue operators."
The development of the new code has been welcomed by the UK Housing Alliance (UKHA), a sale and rent back provider.
"We applaud the efforts the NLA are making to regulate this sector and UK Housing Alliance actually go further than the code of practice requires in many areas," said Douglas Lister, chief executive of UKHA.
"To help protect consumers, UKHA are fully signed up to the code of practice the NLA has developed and are keen to work with them as closely as possible to ensure it is a success."
Chris O'Toole