If you are in financial difficulties you may be tempted to get help from companies which offer to buy your home and then rent it back to you for a fixed period of time (six months or more). They can buy your home quickly - sometimes within a week but more often three to four and they are called flash sales or mortgage rescue, sale and rent-back (SRB) or sell-to-let schemes.

Selling your house by a flash sale may clear your mortgage debts and enable you to stay in your home but most of these companies will pay you less than the market value of your property. Furthermore you will no longer own your own home and this means there are risks, such as:

• you could still be evicted if you breach any of the terms of your tenancy, for example if you fall behind with your new rental payments;
• if the person or firm buying your home gets into financial difficulties, the property could still be repossessed and you might have to leave; and
• your rental agreement may not be renewed so you could still have to leave after the initial term (normally 6-12 months) comes to an end.

Many consumers enter into these SRB arrangements without understanding the costs and risks involved causing further distress for those already in trouble.

Up to now these schemes have fallen outside the control of the Financial Services Agency (FSA) but following investigations into concerns about unscrupulous sale and rent back operators, the regulator hopes to introduce a new regime on 1 July to tackle immediate problems in the SRB market.

This means, you can check if a firm is regulated and you will have access to complaints procedures if they are. Under the interim regime firms will need to meet conditions including a requirement for adequate resources and for businesses to be run by fit and proper people in a proper business manner. The FSA will put in place its full regulatory regime in the second quarter of 2010, following consultation and the publication of its final rules.

Mike's comment

It's about time legislation was introduced to control this area as many families have sold their homes on the understanding that they will remain in the home, albeit as a tenant, only to find they have a short tenancy agreement and end up being evicted some 6 - 12 months later.

Of course, not all of the industry works in this way, but this new regulation will bring some transparency and integrity to these schemes and should curb those who have previously preyed on the vulnerable and desperate.