The Office of Fair Trading has ordered 16 ’sell and rent back’ companies to substantiate the claims they make in advertisements. If there is any discovery of ‘unfair and misleading’ claims, then the firms could be open to prosecution.

Sell and rent back is touted as an alternative to repossession for people struggling to make their mortgage payments. The idea is that the firm buys your house from you but lets you remain in the property as tenants.

There have been accusations that the advertising for these arrangements gives a misleading picture of how long the former homeowners can stay on as tenants, giving the impression that their stay can be unlimited, whereas in reality people have found themselves evicted within months.

This new industry is at present unregulated, and with up to 50,000 transactions already having taken place, both the Council of Mortgage Lenders and Citizens Advice have called for the financial authorities to introduce regulation soon.

This entry was posted on Wednesday, February 4th, 2009 at 2:55 pm and is filed under Mortgage Debt and Repossession. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.