The rules for ?sale and rent back? agreements are to change so that owners swapping to tenancy will be guaranteed occupancy for at least five years.
Proposals originally made last September will now become part of the change in regulations to be brought in by the Financial Services Authority (FSA), which will come into effect on 30 June 2010. The purpose of the new rules is to protect homeowners from falling foul of dodgy financial companies.
Ed Harley of the FSA told the BBC: ?For some people in financial difficulty, staying in their home remains very important and selling their home and renting it back in this way can be right for them.?
?But we are aware of some firms exploiting vulnerable consumers at a difficult time. So, it is right that we introduce these further protections, and we will take swift action where they are not met,? he continued.
Interim regulations were introduced last July, and the new rules will build on these to remove exploitation in advertising and high-pressure sales practices.
Chairman of the FSA?s consumer panel, Adam Phillips, welcomed the changes, saying that sale and rent back could provide easy money for firms seeking to exploit desperate people.
?Firms have been able to lure vulnerable people into deals which they later regret when the rent rises or they lose their home,? he commented.
A 2008 enquiry by the Office of Fair Trading found some deals offered by such firms were devious and dishonest. Some people, lured into selling their homes at a cut price and believing they would be able to stay there, found themselves evicted while their home was sold at a hefty profit. Those facing repossession were most often targeted.
Michael Coogan of the Council of Mortgage Lenders said the rules were welcome and that borrowers in arrears should always discuss options with their lender.
