OFT investigates sixteen sale-and-rent-back firms

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by Gill Montia

The Office of Fair Trading (OFT) is investigating the practices of 16 sale-and-rent-back firms.

Complaints centre on the companies’ advertisements and the OFT is demanding that advertising claims must be substantiated within 14 days, following which further action may be taken.

Apparently, some sale-and-rent-back operators are giving the impression that customers who sell their homes can then stay in the properties as tenants for as long as they wish, paying a reasonable rent, when this is not the case.

The rapidly growing sale-and-rent-back sector has been the subject of concern for some time.

Desperate homeowners in danger of repossession have been known to sell their houses at huge discounts in the belief that they would have a secure future as tenants.

However, some have then been offered assured shorthold tenancies which give their landlords the right to serve notice to quit after just six months.

The industry has also gained a bad reputation for charging exorbitant fees.

In October, the OFT issued a report on the sector in which it outlined key areas for regulation, including a requirement that firms make potential customers aware they can obtain free, independent advice on any sale-and-rent-back deal.

At the time, the watchdog estimated that operators in the market numbered around 2,000.