Farewell to the bad image of rent-back

21 June 2010

The sale-and-rent-back world as we know it will come to an end on June 30, which is cause for celebration.

At the end of this month the sector will finally be fully regulated by the Financial Services Authority, putting it on an equal footing with other regulated products such as mortgages and insurance.

At last, the tarnished image of rent-back can be buried for good and brokers can refer clients to firms with confidence.

Why should they? Because despite its recent forecast downgrade the Council of Mortgage Lenders still anticipates that around 50,000 home owners will have their properties repossessed this year.

That equates to roughly one home every 10 minutes. And to date the government Mortgage Rescue Scheme has helped just 628 home owners.
The harsh truth is that despite all the talk by the government and lenders there has been no practical solution to avert the inevitable for nearly 50,000 families this year - until June 30, that is.

The new rent-back regulations mean there will be a practical solution at hand.

New schemes give home owners the protection of five-year assured shorthold tenancy agreements, providing them with plenty of time to get their finances back on track without having to move home.

Surely that is an option worth exploring for any broker with clients who are facing possible repossession.

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