Landmark ruling on sale and rent back
Judge rules family can stay in home
Friday, 10, Jul 2009 09:52
A family has won a landmark case against a sale and rent back company after nearly losing their home.
In the ruling, Judge Worster branded the sale and rent back company Repossessions Stopped as 'dishonest' for promising Paul and Amanda Jackson they could stay in their home for life.
Within two years of selling their home to the company, the Jacksons were threatened with eviction after the property's new owner defaulted on the mortgage and was the property was repossessed.
But the judge ruled the family can either revert to being owner-occupiers, or rent the property for the rest of their lives, with their daughter inheriting the tenancy.
John Gallagher, solicitor for charity Shelter, which brought the case to court, said: "This is a huge and important victory for not only the Jackson family but everyone who is tempted by these sale and rent back schemes."
Sale and rent back companies offer a solution to people who are facing repossession - but until recently the practice was unregulated and many found themselves evicted despite promises they would be able to stay indefinitely.
Steve Brooker, markets expert for Consumer Focus, said: "It is great news for users of these schemes that this case has been won. Sale and rent-back customers are at high risk of getting a raw deal, selling at a discount with often only short-term rights to stay in their home.
"The risks may be even higher in the recession, with few guarantees of what happens to customers if a sale and rent-back company goes bust."
The Financial Services Authority (FSA) is now regulating the schemes under an interim regime, with full regulation starting next year.
Consumer groups recommend anyone considering such a scheme to seek independent financial advice and explore other options first.
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