SARB schemes are helping home owners

1 February 2010

Recent reports from the Conservative party suggest that repossession figures in 2009 were understated because of the exclusion of sale-and-rent-back statistics.

According to figures released by the Council of Mortgage Lenders there were 48,000 repossessions in 2009, compared with 75,000 in 1991 at the peak of the last recession.

But Grant Shapps, shadow housing minister at the Conservative Party, has claimed that the true number of people losing their homes is far higher because of included in these figures.

Of course, this information is being used by both parties for a degree of political jousting but the claims being posted by the shadow housing minister suggest that he may not have a full grasp of the SARB facility.

Indeed, to include these SARB figures could prove to be misleading. The reality is that people embarking upon the SARB option have not been repossessed.

Surely this simple fact puts an end to any debate as to whether these figures should be included in any future repossession statistics.

Homeowners have in fact been saved from repossession by the intervention of SARB firms, often taking on a risk that lenders won’t.

It is even fair to say that the statistics would be considerably worse if there wasn’t a SARB industry as it would appear the government’s alternative scheme hasn’t yet proved to be successful.

It is even fair to say that the statistics would be considerably worse if there wasn’t a SARB industry

Depending on the options made available to them, a number of SARB schemes will enable people to either remain in their homes long-term as tenants, or, in some cases, they may be given an option to buy the house back.

There is an argument that in publicising these numbers it would help highlight the effectiveness and demand for SARB and aid market perception.

Of course, this year will see the SARB market come under the scrutiny of the regulator which is a positive move that will impart a greater deal of professionalism within this sector.

The Financial Services Authority has, quite rightly, set its stall out on protecting consumers and in giving this sector nothing less than its absolute attention. The prevention of high pressure and inappropriate sales is vital to raising standards and firms should be expected meet tough standards of business conduct in order to achieve full authorisation.

The FSA has also confirmed that firms should be using the standard application packs for home finance.

These have been modified to take account of the SARB sector, but while the FSA will not be producing any SARB specific application forms they will shortly be issuing some guidance notes and for firms operating in this area.

These notes are certainly something to look out for as SARB remains a complex area of the market.

Fortunately, support is out there and a good quality compliance support package will go a long way to gaining and maintaining the standards set out by the regulator.

CLAIRE WILKINSON
RETAIL DIRECTOR
COMPLIANCY SERVICES

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