This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7400304.stm
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
Version 0 | Version 1 |
---|---|
OFT to probe 'sale and rent back' | OFT to probe 'sale and rent back' |
(about 2 hours later) | |
The Office of Fair Trading (OFT) is to study whether people facing repossession are adequately protected in so-called "mortgage rescue" schemes. | The Office of Fair Trading (OFT) is to study whether people facing repossession are adequately protected in so-called "mortgage rescue" schemes. |
Householders in difficulty are offered a quick sale of their home at a discount by buy-to-let investors and in return become a tenant in the house. | Householders in difficulty are offered a quick sale of their home at a discount by buy-to-let investors and in return become a tenant in the house. |
Consumer groups have called for regulation of these schemes, also called "sale and rent back". | Consumer groups have called for regulation of these schemes, also called "sale and rent back". |
The OFT is aiming to report on the industry by September. | |
John Fingleton, OFT chief executive, said that they wanted to take "a good look" at whether consumers were adequately informed and protected. | John Fingleton, OFT chief executive, said that they wanted to take "a good look" at whether consumers were adequately informed and protected. |
"Sale and rent back schemes might be helpful for some consumers but there are a number of potential concerns including whether consumers in difficult circumstances are making well informed choices," he said. | "Sale and rent back schemes might be helpful for some consumers but there are a number of potential concerns including whether consumers in difficult circumstances are making well informed choices," he said. |
Growing market | Growing market |
The sale and rent back market is relatively new but has been growing quickly. | The sale and rent back market is relatively new but has been growing quickly. |
It could continue to rise in popularity with more people predicted to be facing repossession this year. | It could continue to rise in popularity with more people predicted to be facing repossession this year. |
The Council of Mortgage Lenders predicts that there will be 45,000 repossessions in the UK in 2008, up from 27,100 in the previous year. | The Council of Mortgage Lenders predicts that there will be 45,000 repossessions in the UK in 2008, up from 27,100 in the previous year. |
On 9 May, the Ministry of Justice said the number of orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008. | On 9 May, the Ministry of Justice said the number of orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008. |
Calls for regulation | Calls for regulation |
The OFT, which will collect evidence from ex-homeowners who took the sale and rent back option, said the study was "timely" given the current economic climate. | The OFT, which will collect evidence from ex-homeowners who took the sale and rent back option, said the study was "timely" given the current economic climate. |
It could propose anything from a new industry code of practice, consumer education, action against companies found to be breaking existing consumer laws, or a full investigation by the Competition Commission. | It could propose anything from a new industry code of practice, consumer education, action against companies found to be breaking existing consumer laws, or a full investigation by the Competition Commission. |
Lenders predict a sharp rise in repossessions in 2008 | Lenders predict a sharp rise in repossessions in 2008 |
In advertisements in the tabloid press and on the internet, people in financial trouble are attracted by headlines such as "Avoid Repossessions". | In advertisements in the tabloid press and on the internet, people in financial trouble are attracted by headlines such as "Avoid Repossessions". |
They are then offered a quick sale of their property, typically at a 20% discount, and stay in it by renting back. | They are then offered a quick sale of their property, typically at a 20% discount, and stay in it by renting back. |
The buyer then becomes the landlord and the seller becomes the tenant, often with an option of buying the property back at a later date if their financial position picks up. | The buyer then becomes the landlord and the seller becomes the tenant, often with an option of buying the property back at a later date if their financial position picks up. |
There is no regulation of the schemes and no requirement for those who run them to register at Companies House. | There is no regulation of the schemes and no requirement for those who run them to register at Companies House. |
Glen Ackroyd, director of one of the largest firms, a-quick-sale.co.uk, told the BBC's The Truth About Property programme that he estimated some 20,000 people now sold their homes to mortgage rescue companies every year. | Glen Ackroyd, director of one of the largest firms, a-quick-sale.co.uk, told the BBC's The Truth About Property programme that he estimated some 20,000 people now sold their homes to mortgage rescue companies every year. |
He leads a trade association, the Property Buyers' Association, which - alongside charity Shelter and the Council of Mortgage Lenders - is calling for these schemes to be regulated. | He leads a trade association, the Property Buyers' Association, which - alongside charity Shelter and the Council of Mortgage Lenders - is calling for these schemes to be regulated. |
Previous version
1
Next version