Rent-back still operating despite shutdown by FSA

A number of firms are still offering sale-and-rent-back services despite the Financial Services Authority declaring the market temporarily shut less than three months ago.

Mortgage Strategy has contacted a number of firms providing rent-back services and has been offered the facility by two firms.

In February 2012 the regulator claimed the market was temporarily shut after it carried out a review of 22 firms and found most schemes were either unaffordable or unsuitable and never should have been sold.

Out of the 22, only nine had been active since the FSA began regulating rent-back in June 2010.

Of these, one had been referred to the FSA’s enforcement division while others either stopped taking on new business or cancelled their permissions.
When Mortgage Strategy contacted one firm, which is listed as having applied to cancel its FSA permission, it told us: “We offer a rent-back service. You would sell the house to us and then rent it back from us directly. But we can’t offer a long-term rental, it is just short term and varies on the property and area.”
It said a typical rental would be between six months to a year.

Another firm that was not on the FSA register told us that if we filled in the online application form, it would contact an associate to see if they would be interested in buying our property and renting it back to us.

A spokesman for the FSA says that when a firm applies to cancel its permission, it can still trade for six months after its application date.

But he says: “It was our understanding that when we declared the market shut, none of the businesses were offering new business and were just servicing past cases.”

The spokesman adds that its review looked at regulated firms and that no doubt there are still firms operating outside the law.