Thrifty Loans

With the numbers of families facing repossession on the increase, there is concern about the growing ‘sell and rent back’ market. Businesses in this arena offer to buy properties from those struggling to meet their mortgage repayments and then lease them back to save them having to move out of their home. The worry is that these firms take advantage of the desperation of the sellers by paying them well below market value, with figures paid in some cases being only a quarter of the real worth of the property. Even worse problems can follow. For example the company may suggest a reasonable rent for the first six months, but then whack the rent up after that time, forcing the family to move out anyway. Then the firm is able to sell the property on for a vast profit. The family, meanwhile, is left without a home, and without enough money to buy another home.

Sale and rent back schemes are not illegal, and they have seen a boom after the recent five interest rate rises have caused an increase in the number of repossessions in the country.

There are concerns that unscrupulous firms are targeting vulnerable homeowners to try and make some easy money. There has been a report of one case where an elderly man living alone sold his home, valued at £165,000, for less than £40,000.

These kind firms use local newspapers or door-to-door leaflet drops to advertise their services to offer money to help clients pay off debts, and save homeowners from the looming threat of repossession.

The problems begin when clients sign up to the process, suddenly finding that they are offered a substantially reduced amount for their house, way below its true value. Once they have sold, they have little control over what happens to them even though they have been told they will be able to continue to live in the house.

Other sad tales have included the landlord buying the house, then defaulting on the mortgage, leaving the bank to repossess the house anyway, and the previous owner was suddenly left homeless after all.

Citizens Advice have asked the Government to regulate the sale and rent back industry to prevent similar misery being heaped on unfortunate, but desperate householders.