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NLA develops sale and rent back code

NLA develops sale and rent back code

Monday, 4 August 2008 12:00 AM

The National Landlords Association (NLA) has attempted to develop a Code of Practice for the sale and rent back industry.

With homeowners increasingly facing financial strife in the wake of the credit crunch, the NLA argues a well regulated sale and rent back sector could provide a legitimate escape route for some.

However, the industry has a somewhat tarnished reputation, prompting the NLA to move toward self regulation.

"Unsurprisingly, sale and rent back continues to be a controversial issue," explained NLA chairman, David Salusbury.

"Far from being an alternative to the many equity release products aimed at older people, sale and rent back offers flexible tenure for those can no longer afford the costs of home ownership.

"For some, becoming tenants will be a temporary stop-gap while they get their finances back in order. For others, they will reap the benefits - including cost - of living in rental accommodation," he added.

The NLA has now requested interested parties submit views on a potential Code of Practice for landlords involved in the sale and rent back market.

It is hoped this will allow for the placing of the protection of vulnerable consumers at the heart of the proposals.

"As we have said before, people's homes are not like other commodities," continued Mr Salusbury.

"We must act in order to ensure those consumers facing financial difficulty and imminent repossession are protected from rogue landlords."

The Office of Fair Trading (OFT) has now launched a market study into sale and rent back which is due to complete its work in September.

One of the possible outcomes following the OFT market study could be to encourage the development of a consumer Code of Practice.

Commenting on the proposed Code of Practice, Dean Mirfin, business development director of Key Retirement Solutions, said: "We are pleased to see that some action is being taken to address practices in the growing sale and rent back market.

"A Code of Practice, as the NLA is putting forward, is one step towards trying to crackdown on unscrupulous providers, but, until the OFT has conducted its market study, it's not 100 per cent clear what areas truly need addressing."

The draft NLA Code can be downloaded in full from NLA Rent Back.

Chris O'Toole