A mystery shopping exercise by Sarb firm National Property Buyers revealed that firms operating after interim regulation began on 1 July 2009 continue to offer mortgage cases to lenders that are misrepresented as unoccupied properties, instead of Sarb transactions with tenants in place.
If a lender is unaware that the property has a tenant, the tenant has no security of tenure if a landlord falls behind with the rent.
One Sarb firm reported that a client contacted it a few weeks ago, worried that her purchase contract for a property with a Sarb tenant stated the property was vacant. The client considered restarting a legal purchase, but worried that the deal would fall through, she completed the sale with the rogue firm a few days later. The incident has already been reported to the financial watchdog.
Garry Slater, managing director, SellAndRentBackToday.co.uk, a division of National Property Buyers, which received FSA approval on Friday, said: “Many of the Sarb firms we mystery shopped turn a blind eye over how clients fund their purchases. There is still no mainstream lender offering financing on sale and rent back properties.”
The Office of Fair Trading called for regulation of the sector in October 2008, after an investigation revealed serious mis-selling, poor practice and misleading advertising targeting vulnerable consumers. Full regulation of Sarb began on 30 June this year, but the FSA said it knows rogue firms are still operating.
“We have a department in place taking them down. Any firm conducting business without
regulatory permission has been breaking the law since 30 June. If anyone gives us a details of companies involved, they will be investigated and sanctioned,” said the FSA spokesperson.
Roughly fifty firms were believed to be operating during interim regulation, which has fallen to eight. Pete Thomson, managing director of Residential Property Solutions, which gained authorisation last week, said: “Many of these firms will have sent applications very late in the day, so they are still waiting for the outcome.”
“We are in quite a commanding position, but if you had three or four bigger players like Aviva or the Prudential in this market, it would confer some real credibility,” said Thomson.
