Buy and rent back schemes criticised

Monday, October 22, 2007

Companies that buy homes at vastly reduced prices and then rent them back to the occupier have been criticised by the Citizens Advice Bureau.

Some companies are paying less than 60 per cent of a home's market value and there is no guarantee that they will rent it back to the original owners for more than six to 12 months, At which point the original owners could be made homeless. This is because the landlord will be able to achieve a higher rate of rental income than that was originally agreed when the agreement to buy and rent back was drawn up.

These are people who are vulnerable trying to stay in their home who are being enticed into an industry that has no controls on it at all at the moment. It is potentially a disaster waiting to happen. Something needs to be done to regulate this side of the market for it to have a framework of quality and assurances.

There has been a large increse in the number of companies offering sale and rent-back in the last 18 months.