Office of Fair Trading
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Sale and rent back firms change or remove advertising following OFT action
Twelve firms offering sale and rent back services have agreed to change their adverts or take down their websites completely after the OFT challenged some of their statements made to consumers.
The OFT issued formal notifications to the firms in January about advertising for sale and rent back services, which involves buying homes from individuals, usually at a significant discount, and renting them back to the previous owners. The OFT asked the firms to substantiate claims made in their adverts or change them - typical statements included that residents are able to live in properties for life after they have sold them, benefit from low rent or buy back their homes at any point.
The firms have agreed to stop or amend publicity:
- six companies have taken down their websites - propertysaleforcash.com, myhomerescue.co.uk, UKsaleandrentback.com, skpropertysolutions.com, fullhouseuk.com and quicksalefast.co.uk
- three businesses no longer offer sale and rent back - n-and-b-property-buyers.co.uk, sell-your-house-quick-help.com, and rapidhomesale.org, and
- three firms' websites have been amended - sell-quick.co.uk, nationalpropertybuyers.co.uk, and quickpurchase.co.uk.
This action follows a market study by the OFT which recommended that the sale and rentback sector was regulated. One objective of the OFT's action was to ensure that consumer protection enforcement was effective while the Government implemented the OFT's recommendations. The FSA implemented an interim regime this month.
The OFT has drawn a further two firms to the Financial Services Authority's attention.
Heather Clayton, OFT Senior Director of Consumer Protection, said:
'The unsubstantiated claims used by some sale and rent back firms have been particularly concerning since they were targeting consumers suffering financial difficulties and at risk of losing their homes. We are pleased that these firms have agreed to change or remove their advertising.'
1. Since 1 July the FSA has operated an interim regime to tackle immediate problems for customers in the sale and rent back sector. This followed a 2008 OFT market study into the sector concluding the need for statutory regulation. The FSA will introduce a more comprehensive regime on 20 June 2010. Under the interim regime firms will need to meet FSA threshold conditions including the requirement to have adequate resources and to be run by fit and proper people. Firms will also have to comply with the Principles for Businesses in the regime and meet a number of systems and controls and conduct of business rules. The regime can be viewed at the FSA website.
2. The OFT conducted its review of advertisements of firms claiming to provide sale and rent back services following the market study into sale and rent back.
3. There is little reliable data on the size of the industry. However it is likely that there are upwards of 1,000 firms, together with an unknown number of non-professional landlords, who have conducted about 50,000 transactions to date.
4. Under The Enterprise Act 2002, the OFT may apply for an enforcement order against or seek undertakings from a person or company to stop or prevent infringements of consumer protection laws which harm the collective interests of UK consumers. Criminal action may be taken if certain consumer protection laws have been breached. Such action will only be taken if appropriate.
5. The OFT is unable to provide advice or resolve individual complaints for consumers. Consumers who are concerned about whether sale and rent back is the right product for them should seek independent advice. They may wish to contact an organisation such as their local Citizens Advice Bureau. Consumers who are concerned they have been unfairly treated by a company offering sale and rent back can contact Consumer Direct (tel: 08454 04 05 06 or visit the Consumer Direct website).
6. The OFT originally wrote to 16 firms - one of the companies was, on further investigation, a second branch of another of the firms. A second firm was, on investigation, found not to be offering sale and rent back but estate agency services. The OFT has advised the business of its duties as an estate agent.