Sale and rent-back could still claim more victims, says FSA

People who sold their homes for less than they were worth to sale and rent-back firms could be haunted by their decision at some time in the future.

Most who sold their homes were in desperate circumstances, fighting off repossession and debt. In exchange for selling at well under market value, they thought they would be allowed to stay on in their homes as tenants.

A number, however, found that they were out on their ears after only six months, or were evicted when the buyer stopped paying the mortgage and the property was repossessed.

The FSA stepped in to regulate the industry and effectively shut the market down in February.

It has now published the results of a highly critical review of 22 authorised sale and rent-back firms.

The FSA said that consumers have entered into agreements that have either already led to a detrimental outcome or are highly likely to in the future.

The FSA said: “This is unacceptable, and we are taking immediate action to address this. We took immediate action in order to address these failings and we continue to monitor activity in the market. We will take action where necessary in order to protect vulnerable consumers.”

The review found that high-pressure selling was endemic, and that firms charged high commissions.

Of the 22 firms, only nine had been active since the FSA began regulating rent-back, and of these, five had stopped doing rent-back, three had kept their permissions but decided against using them, and one will only purchase second-hand rent-backs from other firms.

Five of the firms have agreed to undertake reviews of past business, which could result in redress for consumers.

The FSA said that one firm has already been referred to enforcement over its conduct.