Sale and rent back deals end

A last resort for households faced with repossession has been blocked after the transactions were found to be unaffordable or unsuitable.

The “sale and rent back” (SRB) market, by which people sell their properties to companies, sometimes for 60 per cent to 70 per cent of their market value, before renting them back, has been temporarily shut down.

The Financial Services Authority (FSA) said the market has been halted after a review of all regulated SRB firms to protect “vulnerable” customers. The FSA said: “The review identified widespread poor practice among SRB firms. The main conclusion is that the majority of SRB sales were either unaffordable or inappropriate.

“This means consumers have entered into agreements that have already led to a detrimental outcome, or are highly likely to in the future. This is unacceptable, and we are taking immediate action to address this.”