We're seeing a rash of opportunists trying to make money from those suffering most in the housing downturn in the UK.
But now we have another example of the biter bit.
The UK's Office of Fair Trading, a government department that regulates private companies and ensures fair competition and good practice to customers, has issued formal "notices" to 16 so-called "sale and rent back". These are the companies that offer to buy properties from financially-stretched home owners, and then rent them back to the same people.
The notices mean the firms have to substantiate claims they have made in their public advertisements and, in some cases, in their private correspondence with prospective clients.
Typical of the claims made in the advertisements are:
- that owners can remain in the homes they sell for as long as they wish, paying only a fair market rent;
- that the 'renters' can in theory buy back their homes at some point in the future; and
- that the new arrangements constitute fair rents and appropriate rental terms and conditions.
Now until the 16 firms respond to the OFT there is no way of knowing whether these have broken the law, been guilty of sharp practice, or done nothing wrong whatsoever.
But nevertheless there is a nasty smell of possible mis-selling coming out of the young sale and rent back industry in the country.
As so often happens in these circumstances it is the most vulnerable who are involved – the same people who may be least able to spot pitfalls or read small print in confusingly-worded deals.
By the end of February, the OFT will have received its responses and will decide what to do.
This story will run-and-run… watch this space.
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