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News: Sale and rent back under fire

Thu, 25 Oct 07

Sale and rent back property investors are being urged to sign up to a new organisation and code of practice to represent their interests...

The Money Centre, one of the UK’s leading buy-to-let mortgage brokers, is to set up the National Association of Sale and Rent Back, or NASARB for short, and intends to work with the Council of Mortgage Lenders, property investors, landlord associations and housing charities to draft a voluntary code of practice in an effort to regulate an industry that currently has no controls. It is hoped the code will be registered with the Office of Fair Trading.

Mark Alexander, managing director of The Money Centre said: “Cowboy companies and landlords operating dodgy sale and rent back schemes are giving the buy-to-let industry a bad name.

“I support the moves the Council of Mortgage Lenders, Shelter and the Citizens Advice Bureau have made recently in lobbying Government. My concern now is to make sure that landlords’ interests are also represented.

Challenging the industry

Mr Alexander continued: “If properly regulated, sale and rent back schemes can help people who find themselves struggling financially to stay in their family homes which makes a rewarding investment for landlords. I’m challenging the industry to get its act together and join me in developing a code of practice.”

Sale and rent back schemes have come under fire in the media recently fuelled by stories of properties being bought for less than their market value, landlords not offering any security of tenure and then enforcing big rent rises. Tenants are also at risk of being forced out of their homes by landlords who go bankrupt and have to sell the properties.

Mr Alexander has been looking into the negative issues surrounding sale and rent back schemes for over a year and proposes a voluntary code of practice which would mean landlords who buy properties specifically to rent back to their previous owners would sign up to a range of measures designed to protect the tenant from eviction and repossession.

These include personal undertakings from landlords not to issue Section 21 orders, which currently means tenants can be forced out of their homes with just two months notice, and an assurance not to increase rent by more than the rate of inflation.

Landlord vetting required

Mr Alexander also suggests that landlords who register to join NASARB would be vetted to ensure they meet certain criteria designed to weed out unscrupulous companies only in the business for quick profits. Landlords should also have to prove a solvent and responsible track record in the buy-to-let sector and have all the necessary landlord insurances in place.

Property landlords, mortgage lenders and anyone else who would like to help develop the code of practice or who wishes to find out more about NASARB should go to www.nasarb.org

 

 

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