Clampdown on sale-and-rent-back promised

Friday, 15 February 2008 12:00 AM

The National Association of Sale and Rent Back (NASARB) has confirmed a voluntary code of practice for the sector is under development.

The only market-wide national trade body for the sale-and-rent-back sector aims to protect consumers from rogue providers and ensure standards are maintained through the industry.

Following the NASARB's first committee meeting in January, consultation is underway to develop a code of practice which will leave rogue operators exposed, as well as providing consumers with all the information they need to make an informed decision.

"For the most part, sale-and-rent-back providers are trying to offer owner-occupiers who find themselves unable to keep up with mortgage payments the chance of not having to leave their home," said John Socha, chairman NASARB committee.

"However, there are those providers who have been specifically targeting the vulnerable and not offering a secure tenancy going forward and it is this practice which is giving the entire sector a bad name.

"There are also cases of providers demanding massive rent hikes and owner-occupiers being conned out of their own equity. All practices which NASARB condemns."

Sale and rent back is an option providing flexible tenure and the ability to remain in their property for those who can no longer afford home ownership.

Unfortunately, a number of rogue providers are accused of purchasing property at prices far below market value and only offering six-month assured short-hold tenancies, thus providing minimal security of tenure for tenants.

In response, the code of practice will take into account the Financial Services Authority (FSA) principles of treating customers fairly and will give providers a benchmark for good practice while offering consumers the necessary protection.

The NASARB details a key part of the code will be a comprehensive and independent complaint and redress mechanism allowing consumers to report bad practice.

It will also ensure tenants are treated fairly and enter into sale-and-rent-back agreements fully informed.

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