Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

OFT says rules needed for ‘sale and rent back’

Vulnerable can be misled when renting homes back

A row of terrace houses

All homes with 4 or more bedrooms will now need a HIP

Regulation is urgently needed to protect cash-strapped families who sell their houses to companies and then rent them back, according to the Office of Fair Trading (OFT).

The deals are often sold to those with financial problems, who could be facing repossession of their home. However, the trade watchdog found that some companies were misleading people about how long they could rent their house back for and the value of their home.

The OFT cited cases where, despite telling people that they could stay in their home for years, in reality the tenancy was only guaranteed for as little as six months. The OFT also found firms were hiking rents or even evicting people after a short time.

Unsuitable sell and rent back deals 

The OFT found that, as a result, some consumers were signing up to deals that were unsuitable for them. It has therefore recommended that all these companies should be regulated by the Financial Services Authority (FSA).

The details will be drawn up by the FSA and should make valuations, sale prices and the level of rent clearer. The new rules should also ensure companies fulfil any promises they make.

OFT recommendations

John Fingleton, OFT chief executive, said: ‘Our research shows that sale and rent back deals have potential to cause serious and permanent harm to often vulnerable homeowners. The unfamiliar and highly pressurised situations that these people find themselves in may leave them particularly vulnerable to misleading statements or valuations from sale and rent back firms looking to make a deal.

‘Even those customers for whom sale and rent back might be the best option could be unaware they are currently bearing almost of all the risks.

‘Recommending statutory regulation is not something we do lightly or often, however in this case we consider it necessary to put a stop to the unacceptable behaviour of some sale and rent back operators and to ensure consumers are better protected.’

See our guides for more information about and searching for property to rent online. 

For daily consumer news, subscribe to the . If you have an older web browser you may need to copy and paste this link into your newsreader: https://www.which.co.uk/feeds/reviews/news.xml . Find out more about RSS in the Which? guide to news feeds. 

Back to top