Campaigners urge government to act on sale and rent back
November 15, 2007
Campaigners in the UK are urging government officials to act on sale and rent back schemes, which have been at the centre of controversy over recent months, following an increase in the presence and take-up of these scheme as a result of an increased risk of repossession amongst the UK’s homeowners.
These schemes are where companies offer to purchase the properties of homeowners and then rent them back to the former homeowner so that there is no disruption or uprooting involved.
However, although the schemes sound effective in principle there are some major flaws, as pointed out by campaigners including the Citizen’s Advice Bureau.
Firstly, sale and rent back companies often offer only a percentage of the market value of the property, with some homeowners getting just 60% of the property value when they sell their home to one of these companies. A second major flaw is that there is no guarantee of how long the former homeowner will be able to rent the property for following the initial six or twelve month tenancy.
The sale and rent back schemes have been described as a ‘disaster waiting to happen’ but officials from the Citizen’s Advice Bureau. The schemes are now targeting struggling homeowners who may face repossession, and are therefore more likely to be talked into selling their home for a lower value in order to avoid repossession proceedings.
With a huge increase in repossession levels expected over the coming months sale and rent back companies could find themselves with an increasing level of business.
One official from the homeless charity Shelter stated: ‘The actions of some companies offering ’sale-and-lease back’ schemes amounts to daylight robbery, leaving growing numbers of people financially ruined and homeless. The Government must urgently introduce regulation to stamp out this unscrupulous practice, which is cashing in on people’s financial problems and deepening their misery.’
Alan Wright
15th Novemebr 2007
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