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Clarity is needed on code

7 August, 2008

Commenting on the National Landlords Association’s draft code of practice for landlords involved in the Sale and Rent Back market, he said: “We are pleased to see that some action is being taken to address practices in the growing sale and rent back market. A code of practice, as the NLA is putting forward, is one step towards trying to crackdown on unscrupulous providers, but, until the Office of Fair Trading has conducted its market study, it’s not 100% clear what areas truly need addressing.

“However, our main concern is that it still remains an unregulated sector. We are pleased by this first step by the NLA, but do not think that this will be enough until the Government and the Financial Services Authority (FSA) investigate this market fully as a matter of urgency and consider regulation before it becomes a future financial scandal.”

Key Retirement Solutions is concerned about sale and rent back schemes for a variety of reasons:

• They are not regulated as the traditional mortgage and equity release market is by the FSA, hence consumers have little protection

• They are often promoted on the basis that they offer a quick and speedy sale, yet a commitment as big as this should be carefully thought through

• They are being promoted by some as a means of “equity release” which will confuse consumers, yet the method of these schemes differ hugely from regulated lifetime mortgage and home reversion products.