FSA Interim Regulation Sale and Rent Back

The Sale and Rent Back Process

Now that the sale and rent back sector has been regulated, each company has prescriptive guidelines, which they must adhere to. This ensures that the consumer is dealt within a consistent manner. However, whilst it is important to remember that the guidelines set out by the FSA ensure that the consumer is dealt with in accordance with the 6 consumer outcomes, it does not prescribe to the provider the purchase price of the agreement or the period the homeowner can remain within the property.

To ensure consistency, there are a number of documents you can expect to receive from the provider of your sale and rent back agreement:

The Initial Disclosure Document (IDD) or the Terms of Business - this sets out the terms of the agreement that the provider is willing to enter into. Initially, it will set out the fact that the provider is regulated by the FSA. It will also include indicative terms of the sale and rent back agreement, including; the purchase price, the percentage of the purchase price against the value of the property, any charges payable, the rent payable and the minimum length of time the seller may remain in the property.

The Initial Offer Letter - this is received after the IDD, and sets out the terms of the agreement, usually following an assessment of the property from the company or individual wishing to buy your property and rent it back to you.

The Final Offer Letter - this is received once your property has been inspected by a RICS (Royal Institute of Chartered Surveyors) surveyor. It will confirm the final details of the agreement.

It is important to remember that not all firms are able to proceed with the sale and rent back of your property in a timescale to suit your needs. They should be willing to complete the purchase as quickly or slowly as you require.

In addition to the above, make sure you are dealing with a company that has gained interim authorisation, will allow you to remain in your property for at least 3 years, charge either none or very low fees, and will allow you to cancel the proposed agreement at any time prior to the completion of the transaction with little or no outlay on your part.