Positive News On Homes Sale And Rent Back
There is some positive news on the homes sale and rent back market. This is where a householder sells their property to a buyer on the understanding that they can remain in their home and rent it from the new owner. This has been a growing market in recent years and it is easy to understand why that would be.
For many people their home is their largest, perhaps only, investment and to raise money to enjoy a better lifestyle they might be tempted to sell their home. Most people would prefer to stay where they are so the idea that you could sell your home yet continue to live there as a rent payer is appealing.
Unfortunately there have been lots of cases where this process has been widely abused. The homes are usually purchased at a significant discount from the market value which has tempted some unscrupulous purchasers to evict their new tenant as soon as they can so the house can be sold at a considerable profit while other cases have been reported where the tenant has been evicted by the new mortgage holder after the buyer has failed to make the payments on their mortgage.
People who had been promised that they could remain in their home for the rest of their lives have found themselves evicted within a year or eighteen months and something clearly needed to be done about this.
Now the Financial Services Authority (FSA) have announced new rules on these types of transactions.
The FSA has:-
* banned exploitative advertising and high-pressure sales techniques and prohibited the use of emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature;
* introduced a 14 day cooling-off period to give consumers more time to make decisions on sale and rent back;
* banned cold calling and prohibited firms from dropping promotional leaflets through letter boxes;
* confirmed rules to ensure consumers have a security of tenure for a minimum of five years;
* introduced an affordability and appropriateness check across all sales to check that the sale and rent back deal is right for the consumer; and
* put in place measures to ensure all risks are clearly signposted to the customer, via FSA literature and during the sales process.
Security of tenure for 5 years is better than nothing but if you sell and rent back on the assumption you can remain in your home for the rest of your life 5 years doesn’t sound so much. It is, however, a very positive thing that the FSA are acting to curb some of the excesses that have grown up within this industry.
The FSA have also made it compulsory for firms engaged in home sale and rent back to be licenced. All firms active in the sale and rent back market must be authorised otherwise they face potential fines or imprisonment. The FSA is proactively monitoring the SRB market for unauthorised activity, and will take action if necessary.
Consumers should ensure that they only deal with authorised firms and be aware of the risks involved in sale and rent back schemes. Consumers are encouraged to call 0300 500 5000 immediately if they are aware of sale and rent back firms who continue to trade without being authorised.
You can find out more about Home Sale And Rent Back by <clicking here>
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