Rogue SARB Firms Still Operating Despite FSA Regulation
Rogue sale-and-rent-back (SARB) firms are still operating within the UK property market, despite the Financial Services Authority (FSA) cutting down on these types of organisations.
Only 8 sale-and-rent-back firms have so far gained full regulatory permission following regulation that came into effect on 1 July 2009. The regulation was introduced to cut back on firms who continue to offer lenders mortgage deals on misrepresented unoccupied properties.
Tenants have no tenure security if the landlord does not pay the rent and if the mortgage lender is not aware that there is a tenant residing there.
Gary Slater, managing director of accredited SARB firm SellAndRentBackToday.co.uk, a division of National Property Buyers - a firm that has received FSA approval - said: "Many of the SARB firms we mystery shopped turn a blind eye over how clients fund their purchases. There is still no mainstream lender offering financing on sale and rent back properties."
In 2008, the Office of Fair Trading sought regulation in this sector following an investigation that, according to the Mortgage Solutions website, revealed "serious mis-selling, poor practice and misleading advertising targeting vulnerable consumers".
30 June 2010 saw the full regulation against sale and rent back practice being brought in, but according to the FSA, rogue firms are still continuing to trade. "We have a department in place taking them down. Any firm conducting business without regulatory permission has been breaking the law since 30 June," said an FSA spokesperson. "If anyone gives us details of companies involved, they will be investigated and sanctioned," they added.
UK Property news posted by Romany on 12 July 2010
