An industry trade body, the National Association of Sale and Rent Back, has been establish-ed to target poor practice in the sector.
John Socha, chairman of NASARB, says: “There are providers targeting the vulnerable and not offering secure tenancies that are giving the sector a bad name.
“There are also cases of providers demanding massive rent hikes and owner-occupiers being conned out of their equity – practices which NASARB condemns.”
This is the first acknowledgement by the industry that such practices are going on and is a wake-up call for consumers.
A number of sale-and-rent-back providers target the most vulnerable in society, including the elderly and seriously indebted, in return for speedy property sales.
Some companies in the sector pay well below market value for the homes they purchase. So NASARB is consulting about a code of conduct to guide the industry, scheduled to launch in April.
While the devil will be in the detail, the main concern is vulnerable consumers. The trade body plans to warn them that they need to look out for rogue operators.
Although these are positive steps for sale-and-rent-back, for the time being it remains unregulated.
What will be interesting to see over the coming months is whether NASARB’s efforts will be adequate to help the sector get over the bad press it has received.
While the code of conduct may overcome some of these concerns, NASARB will have a considerable PR role to play with the consumer media if it is to get the message across that its members and the sector are safe.
But this may not be enough for consumers and the mortgage industry.
It may take government regulation to give them the comfort and confidence they need.