The new sell and rent back regulations have certainly given homeowners more protection. Since the Financial Services Authority started to regulate the SARB market trust in the industry has improved.
A recent sell and rent back regulation brought in provides tenants with an opportunity to rent back their home for 5 years. This will no doubt prevent less morally obliged companies from offering ridiculously short tenancies, which offer former homeowners little benefit, especially when they are facing repossession.
The SARB (sell and rent back) market is generally used by people who are trying to prevent repossession, cannot obtain credit and are facing mounting debts. In principle selling their homes and renting them back is usually the only and best option available to them at the time.
However, some companies have been criticised for taking advantage of these people when they are at their most vulnerable, often offering very short tenancies and extraordinary low purchase prices. The FSA intervened in 2009 to help protect the public from questionable practices.
Most sell and rent back company’s main objective is to acquire the property as cheap as possible and get rid of the tenant as quickly as possible so they can sell the property on. Not only are these people financially desperate, but also sometimes have strong ties to the house and the area they live in. Perhaps, they need to stay in the area because their children or the house they live in has been in the family for a long time and they have lots of family locally.
Although the new 5 year tenancy will help some individuals this still leaves landlords with the opportunity to systematically increase the rent to an unaffordable level, which would leave the tenant with no choice but to move on. Even though the new regulations do state the landlord must be able to fairly condone the rent increase, this still leaves room for ambiguity. If the new regulation is going to work a new regulation needs to be brought in to control rent levels in the sell and rent back market
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