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Treasury to close sale and rentback loophole


The Treasury is introducing new sale and rentback regulation that will require everyone who buys a property under such a scheme to be authorised by the FSA, unless the buyers and sellers are family members.

Current sale and rentback regulation covers firms which state the activity forms a part of their usual business activities, meaning parties engaging in casual agreements need not be authorised by the FSA. The Treasury intends to close this loophole.

The draft legislation, which is likely to be debated after the Parliamentary summer recess, states that the provider of the sale and rentback agreement is to be regulated by the FSA unless they are related to the person selling the property.

The sector was subject to an interim system of FSA regulation from July 2009 and this was replaced by a full regime in June 2010.

In January, Treasury financial secretary Mark Hoban set out a package of measures to protect consumers in the mortgage market, including the transfer of regulation of second-charge mortgages from the Office of Fair Trading to the FSA and a tightening of the rules for those buying mortgage books.

London & Country head of communications David Hollingworth says: “The sale and rentback sector was crying out for regulation because you are dealing with potentially vulnerable people.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. this is a sham again as quite a few who patroled this area now do it on the basis of they buy the house at a discount and move the client to one of the other properties they have to pay the rent.

    BTL market is to all intent an investment and should be regulated as that.

    Some landlords may get caught out if rise in rates.

  2. I have a friend. He’s short of cash. We arrange between ourselves for me to buy his house and for him to rent it back because he trusts me more than a commercial “regulated” company.

    I don’t do this for the wider public, but I might do it more than once in a personal capacity for friends. Part of the “big society” if you like – help your neighbour.

    The FSA find out they are friends and not family and I go to jail.

    Jeez, what a messed up world we live in.

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