Youngers of Zion

The current financial situation and the slump that has swept across the housing market has resulted in many homeowners struggling to sell their homes and find more affordable accommodation. Many are scared that they will face repossession in the future because they cannot afford to keep up with rising repayments on their mortgages, and a number of homeowners are hoping to sell up and move to rented accommodation to eliminate the risk of repossession and then purchase again when house prices fall.

There is another alternative for those that want to eliminate the risk of repossession, and this is to sell their home to a specialist firm and then rent it back. The number of sale and rent back firms has increased recently, as more and more homeowners look for solutions to their mortgages and housing problems. There have been concerns about these sale and rent back firms, with some officials stating that they pay way below market value and break promises with regards to renting the property back to the former homeowner.

Although a voluntary code of practise was set up for sale and rent back firms earlier this year, there are still concerns over how they operate. One industry official said: ‘Sale and rent back schemes are not regulated but companies advertise everywhere. We are concerned many vulnerable customers may not understand what they are getting into. All they see is a debt solution.’

Another industry official said: ‘Three years ago there were 20 companies offering sale and rent back schemes. Now there are more than 150. Some are genuine - others are rogues. Legislation is needed to protect homeowners in desperate straits.’