Regulation is urgently needed to protect vulnerable consumers who sell their homes to companies and then rent them back from them, the competition watchdog said yesterday.
The Office of Fair Trading said some sale and rent back companies were misleading customers about the value of their homes and their security as tenants.
The OFT will today call for the rapidly growing sale and rent back industry to come under the Financial Services Authority.
The unregulated market has flourished in the past year as forced sales among homeowners facing negative equity and mounting mortgage costs have become a reality in many parts of the country.
Heather Clayton, senior director at the OFT, said sale and rent back deals could be useful but were full of potential financial pitfalls and made many people who used them 'distressed and worried'. She said: 'It’s a very risky product. That’s one of the main reasons we think it should be regulated by the FSA.'