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Owner/occupiers of flats or houses that needed to sell their homes quickly (but didn't want to move) were undoubtedly grateful for the mechanism of sale and rentback. Unfortunately the gratitude was short-lived because many who took up the option and sold their properties to sale and rentback companies did not realise that they were going to be signing up to short term rental agreements, usually an AST (Assured Shorthold Tenancy) and the favoured tenancy used by landlords as it's easier to repossess a property. When these tenancies expired the previous owner was evicted and the property sold on at a profit. Had the unfortunate leaseholders realised that this is what could happen to them from the outset they would obviously have looked for other ways to resolve their financial difficulties!Interim LegislationInterim legislation to deal with the predators who usually targeted those facing repossession was introduced by the FSA in July 2009 with full legislation in place by June 30th. Now, in theory, anyone now wishing to use sale and rentback will be confident that not only can these operators demonstrate that they meet minimum standards but that they are 'fit and proper' persons to operate in that capacity. They will also be required to demonstrate that they have sustainable business plans that will show they have ongoing funding streams and evidence that the funding will not suddenly stop, leaving purchases incompleted. They'll also have to make it clear to consumers what the level of discount being offered is right at the start. AST's ReplacedThe AST's have been replaced by tenancies of at least 5 years and there is now a ban on high-pressure sales techniques. Promotion literature won't contain emotive descriptions such as 'mortgage rescue', 'fast sale' and 'cash quickly'. Cold calling has been banned as has promotional leaflets being stuffed through letter boxes. There is now a 14-day cooling off period to enable those that want to change their minds to do so. All sounds very positive but there is one thing that may have seen little change. It was estimated by the OFT at the time that the legislation was implemented that there wereover 1,000 firms in operation and only around 80 of them had applied for authorisation. So, if you want to be sure that the company you have chosen are FSA regulated then ask them for their unique six digit number and check on the FSA Register.
While this website is constantly checked and updated for accuracy, the information and articles provided by Leasehold Life and it's guest contributors are not to be construed as legal advice.
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