The co-owner of the Homeowners Advice Centre has said that regulations should be introduced to govern the sale and rent back industry.
Regulation is needed to protect consumers from unscrupulous sale and rent back (SRB) landlords, it has been claimed.
SRB companies buy houses from people but agree to rent the property back to them for a certain length of time. The practice is becoming increasingly popular as many homeowners struggle with mortgage repayments.
However, there have been reports that many SRB deals are unfair and consumers end up being forced out of their own property. This has led the Financial Services Authority (FSA) to launch a consultation paper which will look into the regulation of the SRB market.
Al Elliott, co-owner of the Homeowners Advice Centre, backed the move from the FSA and suggested what he believes should be included in the proposals.
"Hopefully, there will be a specific and specialised group of mortgage products developed for companies aiming to offer SRB, which will allow borrowers to extend long-term tenancies," he said. "Also, any SRB provider should be made to provide details of where to go for independent advice, plus there should perhaps be a standard form that has to go out with every communication informing the homeowner that there are other options, and that SRB may not be the only answer."
