Despite the fact that the Financial Services Authority (FSA) has recently introduced new regulation to the sale and rent back sector, many such companies are still advertising their products even though they are no longer authorised, or allowed to do so, according to a new report from the charity Shelter.

Sale and rent back schemes are designed to help home owners who are struggling with their home owner loan and are often in a heavy loan arrears situation, in many cases facing possible repossession, to remain in their home.

This is achieved by buying the property from them, usually at a heavily discounted price, thereby allowing the individual to pay off their outstanding home owner loan along with any loan arrears and then renting the property back to the former owner under a normal rental agreement. The problem with this is that companies often prey on vulnerable individuals who are in a desperate situation with their home owner loan and offer them a price well below the market value of the property and no guarantee that they can remain in their home.

The FSA introduced interim regulation in July this year in order to combat this problem, with full regulation to follow next summer, but Shelter have said that they have discovered four companies advertising sale and rent back schemes in the National Press, who are not regulated and therefore acting illegally.

Kay Boycott of Shelter said “We are shocked to discover some rogue and unregulated companies have the nerve to advertise in national newspapers when they are operating completely outside the law. If almost a quarter of the big firms who are advertising in national newspapers are unregulated, then it is highly likely that many more of the smaller companies are operating completely under the radar. As a charity, it should not be our responsibility to check whether the new regulation is being enforced and the FSA must get tougher on companies still not signed up.”

We are constantly being told that banks and building societies are starting to offer loans to individuals once again and that the flow of credit is easing slightly.

However, a recent survey from the credit agency Equifax has revealed that the number of people who are struggling to be accepted for a new home owner loan or mortgage on the first application is still a major problem and the number of borrowers who are forced to make more than one loan application before they are accepted is actually increasing.

Equifax conducted a similar survey in September last year and found that 23 per cent of all home buyers had experienced difficulty in obtaining the loan they required on the first attempt. When the same survey was conducted this year, the results showed that this number had increased to 45 per cent who were struggling to get a cheap loan at the first attempt. The main reason given for the increase in loan rejections is due to the much tighter lending criteria which is being imposed by lenders, along with much lower loan to value ratios which require buyers to save a much larger deposit than previously.

Neil Munroe of Equifax said “The impact of the current financial climate seems to be continuing to hit those looking for a good mortgage deal. This probably isn’t a surprise to many in the home buying market, but it does indicate that lenders are still being very selective about who they extend the best deals to.

A quarter of respondents to our survey this year thought that they probably couldn’t get a good deal first time round, because of past defaults on their credit file, this is pretty similar to last year. But what has changed is that 17 per cent of respondents put their difficulties down to not having a large enough deposit, compared to just 9 per cent saying the same in 2008.”

On Monday this week (19th October) the Financial Services Authority (FSA) published its proposals for major changes to the rules for the regulation of home owner loans and mortgages and since the publication, many industry experts have been voicing their opinions, both good and bad, regarding some of the proposed changes.

One of the major concerns across the industry is that the changes to the rules will slow down, or even stop the signs of recovery which we are starting to see in the housing and home owner loan markets, due to lenders becoming even more cautious about offering loans to customers and certain individuals who already have a home owner loan being denied from taking out a new loan.

As has already mentioned earlier this week, the proposals will mean a complete ban on self certification loans and much tighter checks on affordability, for which the lender will be responsible if the loan falls into arrears. These changes are likely to push many individuals out of the home owner loan market altogether, despite the fact that many of them will already have an existing loan, either on a self certification basis, or with a high income to loan ratio.

Steven Foden of Propertydatingagency.com said “The fear is that this will give cautious mortgage lenders an excuse to become even more cautious. This will shut the stable doors long after the horse has bolted. Sellers are still taking nearly seven months to sell their houses and part of that is due to the cautious attitude of mortgage lenders.

Many of them are clamping down on perfectly creditworthy borrowers and the fear is that they will now over react again. The excesses of the mortgage market should be stopped and the FSA’s plans are an entirely sensible way of tackling the old excesses. It is difficult though to claim that there is much evidence of excessive borrowing in the past year.”

Over the course of the last few years, the Post Office has seen its important role in the everyday lives of UK consumers steadily dwindling, as its traditional services have become available elsewhere.

Many of its services, are now available via the internet, benefits are often paid directly into people’s bank accounts and you can now even buy stamps at the Supermarket. A few weeks ago, at the Labour Party conference, the Prime Minister Gordon Brown announced that as a part of the major changes occurring within the financial services and banking sectors, the Post Office would be taking on a larger role in providing financial services to its customers and in particular, a range of new loan products to compete with the main high street banks and building societies.

Earlier this week the Post Office announced a new range of home owner loan and mortgage products, which will be available in all branches. The products are intended to raise the profile of the Post Office and enable it to offer a competitive range of loan products as an alternative to the main high street lenders. The Post Office intends to launch fixed rate loan products for a two, three and five year terms, along with a tracker rate loan. The current range of loan products will also remain available, including buy to let loans.

Az Alibhai of the Post Office said “We offer a choice of different products to meet different borrowing needs and all customers can benefit from our low fixed arrangement fee. What is more, as our revert rate is currently the best in the market and tied to the base rate, customers on fixed rate deals won’t be in for any nasty surprises once their initial rate period ends and can expect good long term value.”

Later today the financial regulator, the Financial Services Authority (FSA) will publish its proposals for what could be drastic alterations to the rules which regulate the home owner loan and mortgage industry.

The changes have been planned over several months and have been brought about by the problems caused by the credit crunch and economic slow down, which has stretched too many borrowers beyond their financial limits leading to increased levels of loan arrears and high numbers of repossessions. The Government have placed the blame for many of these problems with banks and building societies, due to irresponsible lending to individuals in the past causing the current financial problems for many borrowers and lenders alike.

The new plans are designed to put a stop to the irresponsible lending practices of the past, by introducing new legislation and regulation for the home owner loan and mortgage industry. As a part of these changes it is expected that the FSA will place a complete ban on self certification loans and mortgages and possibly even changes to the traditional loan to value calculation methods, being replaced with loan to income.

Although the FSA have said that there will be no specific maximum loan amount for an individual, the lender must be able to justify the affordability of the loan.

The Prime Minister, Gordon Brown said “Never again should banks and credit card companies encourage you to borrow more than you can realistically afford to repay. I believe lenders should have to carry out proper checks on incomes before agreeing home loans. And to protect home buyers further, we need much tougher rules to make sure that high loan to value or high loan to income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments.”