The National Association of Sale and Rent Back (NASARB) revealed its plans following January's committee meeting, with consultation underway in order to develop the code.
It is hoped that this will help to weed rogue operators out of the sale and rent back market, providing consumers with more stable foundations upon which to make a fully informed decision.
The code of practice will adhere to the Financial Services Authority's (FSA) 'Treating Customers Fairly' (TCF) agenda, providing firms with a benchmark.
"For the most part, sale and rent back providers are trying to offer owner-occupiers who find themselves unable to keep up with mortgage payments the chance of not having to leave their home," said NASARB chairman John Socha.
"However, there are those providers who have been specifically targeting the vulnerable and not offering a secure tenancy going forward and it is this practice which is giving the entire sector a bad name.
"There are also cases of providers demanding massive rent hikes and owner-occupiers being conned out of their own equity, all practices which NASARB condemns."
The draft code will be published in April.
