Whilst the end product might be a speedy home sale, older consumers should not rush into these shady schemes which offer little protection to the participant.
The schemes, which fall outside of the traditional Financial Services Authority (FSA) market regulation, are said to be using the current market conditions to push products by way of a 'life-line' to overstretched consumers.
Key Retirement Solutions' development director, Dean Mirfin, has urged consumers to avoid jumping feet first into the schemes. “Concern is certainly on the up about sale-and-rent-back schemes, a dramatically increasing unregulated sector of the property market," he said.
"In these cases, speed should really not be of the essence as such a big decision linked to the ownership of a home should be carefully thought through, including family members, and an adviser should be consulted who can discuss all possible options.
“We accept that with thorough research some may still opt for these schemes but we urge those who certainly do not need such a quick fix solution to compare all of their options.
"A quick glance at the websites of many of these sale-and-rent back schemes will indicate that they are clearly targeting those that are vulnerable; on the brink of repossession or have unmanageable debts.
“It is also important that consumers realise that sale-and-rent-back is not equity release in the same way as the regulated market. There are many differences, but the key one is that sale-and-rent-back provides very little protection to consumers whereas the equity release industry provides complete protection."
