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Sale and Rent Back- Final Rules

The FSA has released its final rules for firms engaged in Sale and Rent Back (SRB) activity. From 30 June 2010 no firm may engage in sale and rent back activity, including the administration of ongoing schemes, unless they have been granted a permission by the FSA under the full regime. This means that firms who had permission under the interim regime must also stop all activity unless they also obtained a full permission.

The new rules limit the advertising and sale of SRB schemes banning the use of certain wording in advertising (eg. ‘mortgage rescue’), the use of cold calling and high-pressure selling techniques and also introduce a 14-day ‘cooling off period’.

The regime imposes a set method of valuing the property, with a standard letter of instruction to a surveyor instructed jointly by the parties, and a series of requirements to ensue full disclosure.

There are limitations on the type of tenancy that can be granted with the term not permitted to be less than 5 years and the rights of the lender to recover the property for breach heavily restricted.

This is a positive step forward but it has taken a long time to appear.

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