UK Must Regulate Sale and Rent Back Sector

Strathaven based MSP Linda Fabiani has welcomed the announcement by the Scottish Government that it is increasing funding for government backed mortgage to rent schemes by an extra £5 million bringing a total investment in the scheme this year to £15 million.

The move could benefit thousands of home owners facing repossession as Sale and Rent Back schemes allow those facing repossession to sell their house but continue to live in it by paying rent.

A six month investigation by the Office of Fair Trading ruled that sale and rent back should be regulated by the Financial Services Authority to prevent unscrupulous landlords raising rent, evicting tenants or failing to make payments on the property.

Citizens Advice Bureau, the Council of Mortgage Lenders and Shelter all back the OFT’s recommendation for regulation by the Financial Services Authority.

Ms Fabiani said:

“There is a lot of pressure on homeowners at the moment due to the uncertainty created by the economic downturn and some firms are taking unfair advantage of the vulnerable position many people are finding themselves in.

“That is why the Scottish Government wants to see sale and rent back schemes regulated so as to ensure they are properly run and people are protected from unscrupulous operators.

“Some within the sector are buying houses at well below the market value and then committing to only a short-term lease and charging inflated rental prices to the former owners of the property. This is resulting in the former owner being forced out of their homes.

“This is why we want to see regulation in this area and are supporting the OFT recommendations.

”The threat of homelessness for some homeowners has put more pressure on the Scottish Government’s Mortgage to Rent Scheme and we have responded to this by investing an extra £5 million to boost the scheme. This is in addition to the £25 million home owners support fund already established to help people facing repossession.

“We need to ensure that homeowners considering the Mortgage to Rent Scheme have access to sound independent financial advice and £1 million has been pledged to advice agencies such as Citizens Advice Scotland and this goes on top of the extra £3 million already being provided to offer legal advice and representation for people facing repossession and other problems such as debt management.

“We are also funding an awareness-raising campaign for the National Debtline to encourage people to take early action to address debt problems.

The Scottish Government will continue to do what we can to help people in these difficult circumstances”