Voluntary clampdown by sale and rent back company

A company specialising in controversial sale and rent back has launched a new charter, ahead of the first stage of a clampdown that comes into force on July 1.

Residential Property Solutions (RPS), an ARLA member, says it has launched the charter to help consumers and brokers avoid cowboy operators.

RPS chief executive Peter Beaumont said: “It has become apparent from feedback we have received from intermediaries that they are only prepared to deal with ethical sale and rent back firms. However, it is difficult for brokers to sort the wheat from the chaff, so we have drafted a charter which we are suggesting all sale and rent back firms should adhere to if they want to describe themselves as ethical.”

The firm’s charter says that sale and rent back firms should give customers information about the valuation of their property; have a legally binding tenancy agreement that can run for periods of up to five years; and have a legally binding option to buy back their property at any time during their tenancy agreement and be able to share in any increase in value.

The FSA has taken the need to regulate sale and rent back firms so seriously that, for the first time, it has implemented a two-stage implementation. Alarm bells have sounded because debt-laden house-holders have sold their properties for well under market value, in return for tenancies which turn out to have very little security, and all without right of redress.

From July 1, all companies offering sale and rent back schemes must register. Next year, their activities will be fully monitored by the FSA.