Consumer protection Code of Practice for rent-back market

Permalink: Consumer protection Code of Practice for rent-back market
by Lin Freestone

The Office of Fair Trading (OFT) is conducting a market study into sale and rent-back and is expected to publish it in the next ten days. One of the possible outcomes following the OFT market study could be to point towards a consumer code of practice.

The National Landlords’ Association (NLA) has revealed that its Code of Practice will include enforceable legal sanctions and financial penalties for those who fail to comply.

The NLA published its draft Code for consultation in August 2008. Responses have been received from a wide range of stakeholders including Crisis, Shelter, Citizens Advice, Council of Mortgage Lenders, National Federation of Property Professionals, Royal Institute of Chartered Surveyors, British Property Federation and the Chartered Institute of Housing.

There were also a number of responses welcoming the Code from private landlords and larger companies already operating within the sale and rent-back market.

The majority of responses have indicated that the Code of Practice could provide an effective framework and a firm foundation on which to build a robust system. This would help ensure consumer protection by shedding light on sale and rent-back transactions.

The chairman of NLA, David Salusbury, has said that whether the association’s voluntary Code of Practice is a staging post en route to regulation for sale and rent-back or is an end in itself, the critical factor is that vulnerable consumers are protected as soon as possible.

The NLA believes in market-led solutions where possible, and the work it is undertaking reinforces its commitment to removing so-called cowboys from the entire private-rented sector.

He commented that sale and rent-back is not appropriate in all situations. However, for some families who can no longer afford the costs of home ownership, ethical sale and rent-back should certainly be explored.

The association is under no illusions that some property investors have seen the chance to make a quick buck. However, it firmly believes gambling with people’s homes is unacceptable. Changes to the sale and rent-back market must begin now.