There has been lots of coverage in the financial press recently into the controversial sale and rent back schemes which have been in operation over a number of years in the UK, without any form of regulation to protect people taking out such schemes.

Sale and rent back was introduced to help those individuals who owned their own home, through a mortgage or homeowner loan, but were in the situation of having large loan arrears or a default on the loan and facing repossession from their homeowner loan provider.

Although these schemes are seen as a way of allowing someone to remain in their home by selling it to a company, who clears the outstanding loan amount and then charges the individual rent, sale and rent back schemes offered very little protection for consumers and a large number of people ended up losing their homes despite taking out such a plan.

As a result of this, the Financial Services Authority (FSA) launched an investigation and declared that sale and rent back should be regulated, with new interim rules being introduced on July 1st this year, followed by full regulation by the middle of 2010. This week, the first company has been granted authorisation from the FSA to conduct sale and rent back business. Residential Property Solutions (RPS) has become the first company to achieve authorisation and it is hoped that many more will obtain a license in the near future.

Peter Beaumont of RPS said “I am delighted that RPS has been granted interim authorisation by the FSA and I believe we are one of the first firms to be authorised. As important as regulation is, RPS has gone well beyond the minimum standards required of SRB firms by introducing our own ethical charter. I believe this will help raise standards across the whole industry and I am happy to publish the names of all firms who can achieve the standards specified in our charter. Regrettably, no firms have yet put their names forward, but I am hopeful that other SRB providers will see the wisdom of doing so in due course.”