Following a scathing report by the Financial Services Authority (FSA) on multiple inadequacies in the sales, administration and operation of sale and rent back (SARB) transactions in the UK, the practice has effectively come to a halt.
These deals, where homeowners sell the title to their property and then rent it back from property investment companies, proved to be a nightmare for many people. Although when done right, Sell And Rent Back has been a lifeline for homeowners facing repossession but wanting to remain in their home.
Of the 22 companies authorised to conduct such transactions, none are currently offering new deals. One remains prepared to purchase second-hand SARB contracts, five are conducting ‘past business reviews’ and the rest have given up the practice.
“Sale and rent back is often the last resort for struggling homeowners, so we expected to see firms treating their customers much better than this report suggests,” says the FSA’s head of mortgage and general insurance supervision Nausicaa Delfas.
The report identified failings including incorrect assessment of appropriateness and affordability, insufficient disclosure of information, incorrect agreements, breaches of FSA rules and inadequate record keeping.
“Most were more focussed on their own commercial success rather than the welfare of the customers,” concluded the FSA.
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