Sale And Rent Back Schemes

Sale and Rent Back schemes enable individuals to sell their home, usually at a discount, and obtain an agreement to remain in the property for a set period. Typically, this would be through an assured short hold tenancy that used to be for only 6-12 months.

Sale And Rent Back Rules

New rules came into effect on 1st July 2010 that are designed to help protect consumers. They were created and policed by the Financial Conduct Authority (FCA) and are designed to prevent high-pressure and inappropriate sales, and help consumers understand Sale And Rent Back products so they only enter into an agreement where it is an appropriate and sustainable solution for them. i July 2010 and applies by:

The rules are created so that:

  • consumers have better security of tenure through a fixed-term tenancy agreement of at least five years;
  • when creating a Sale and Rent Back scheme, firms check that the consumer can afford the deal and it is right for them
  • non-advised sales are not be allowed
  • various forms of marketing have been banned: cold calling and dropping promotional leaflets through letter boxes that promote Sale and Rent Back schemes
  • firms must make sure that the consumer has checked their ongoing entitlement to benefits so that they money they receive from the scheme does not adversely affect them
  • firms providing Sale and Rent Back plans must provide consumers with additional information to help them make informed decisions
  • the use of emotive terms like cash quickly, fast sale, mortgage rescue, etc have been prohibited in promotional literature;
  • a cooling-off period of 14 days must be given so that consumers have sufficient time to consider their decisions
  • an independent valuation must be carried out where the valuer owes a duty of care to the consumer in all sales