The Office of Fair Trading (OFT) is investigating 16 sale-and-rent-back firms amid concerns their advertisements could be misleading homeowners desperate to avoid being repossessed.

James Meikle, guardian.co.uk – Friday 30 January 2009

The watchdog has issued formal notices to the companies asking them to substantiate claims made in their adverts within 14 days. It will then make a decision on whether to take further action, including prosecution.

Sale-and-rent-back deals schemes allow hard-up home owners to sell their property to specialist firms at a discount in return for tenancy rights.

The action is part of wider checks the OFT is making into what has become known as the “flash sales” sector. This has grown rapidly in recent years but there is little reliable data on its size. The OFT said it is likely there are more than 1,000 firms, plus an unknown number of “non-professional landlords” who have conducted about 50,000 deals.

The firms under investigation are not being named at this stage.

The OFT recommended last October that sale-and-rent-back practices should be regulated by the Financial Services Authority, and suggested a range of measures be introduced including an obligation on firms to be more transparent about the valuation and sale price of homes, the terms of a tenancy and the rent to be paid. Full Article