SNP MSP Bob Doris today welcomed the SNP Government’s announcement of increased funding for government backed mortgage to rent schemes as he revealed Labour has failed to support action to regulate the crucial sale and rent back market – a move which could benefit thousands of home owners facing repossession.

Sale and Rent Back schemes allow those facing repossession to sell their house but continue to live in it by paying rent.

A six month investigation by the Office of Fair Trading ruled that sale and rent back should be regulated by the Financial Services Authority to prevent unscrupulous operators raising rent, evicting tenants or failing to make payments on the property.

Citizens Advice Bureau, the Council of Mortgage Lenders and Shelter all back the OFT’s recommendation for regulation by the Financial Services Authority.

Bob Doris wrote to Scottish Secretary Jim Murphy nearly four weeks ago urging him to support Scottish Government calls for the Financial Services Authority to regulate this market. Mr Murphy has so far failed to reply and no Labour MSP has signed a parliamentary motion calling for action.

Bob Doris said: "The SNP wants to see sale and rent back schemes regulated to prevent people being ripped off by unscrupulous operators.

"Labour’s failure to support moves for sale and rent back to be properly regulated is deeply disturbing. 

"The Scottish Government has acted to increase the funding available for Government backed mortgage to rent schemes by an additional £5 million and has established a £25 million home owners support fund to help people across Scotland facing repossession.

"A six month investigation by the Office of Fair Trading has called for sale and rent back to be regulated by the UK Government and the Financial Services Authority yet there has been no action.

"At a time when people are facing increasing problems meeting their mortgage payments it is ridiculous that neither the Scottish Secretary nor Labour MSPs are willing to support bringing this market under the control of the Financial Services Authority."

Notes:

1. Office of Fair Trading report into Sale and Rent back, published in October 2008 can be found here.

2. Commenting on the report John Fingleton of the OFT said; 'Recommending statutory regulation is not something we do lightly or often, however in this case we consider it necessary to put a stop to the unacceptable behaviour of some sale and rent back operators and to ensure consumers are better protected.' 

3. Citizens Advice Bureau Chief Executive David Harker “With more people seeking advice about mortgage arrears we are concerned that these safeguards should be put in place as soon as possible. Therefore we urge the government to act on the OFT recommendations without delay. In the meantime we call on the reputable businesses in the sale and rent back sector to develop rigorous standards of conduct in the way that sale and rent back agreements are sold and managed.”

S3M-02831 Bob Doris (Glasgow) (Scottish National Party):
Protecting Worried Homeowners— That the Parliament notes the pressure placed on homeowners and the uncertainty created by the current economic crisis; acknowledges the content of the Office of Fair Trading (OFT) market study report on the UK sale and rent back (SRB) sector  where private firms buy and rent back, often at well below market value, the properties of homeowners, often where homeowners are struggling to keep up mortgage payments and facing repossession; condemns the bad practices of some SRB firms, such as giving a verbal commitment on a long-term lease, while in reality committing only to a short-term lease and subsequently charging inflated rental prices to former owners, resulting in their being forced out of their homes; agrees with the OFT report, which recommends regulation by the Financial Services Authority (FSA) as well as ensuring that homeowners considering the SRB option are given independent financial advice and that the UK Government provide greater clarity on the rights of former homeowners in relation to the claiming of housing benefit, and strongly urges Jim Murphy, Secretary of State for Scotland, to join the Scottish Government in pressing the UK Government to act on and implement these recommendations, particularly regulation by the FSA, as quickly as possible.