Sale and Rentback Code: Our Comments

Julian Sampson, partner at Wright & Wright, comments on the new SARB draft code.

“The draft Code has been a work in progress for some time now and I am delighted to see it coming to fruition- particularly as the NLA have taken the sensible step of discussing its content and plans with the OFT. The sale and rentback scheme is potentially one of the most innovative products to come out of the property market for some time, even though it has been a slow burner for several years, and the current lending restrictions have created a new market and model. Innovation without control, however, is dangerous. Regulation may make some of the less-compliant businesses think again- this is a serious and complicated product and it is important that providers enter this for the right reasons- not just because they want to play at being private Landlords. Wright & Wright has decided to go one step further with our Client providers and has created a procedure aligned to that which one might expect from an FSA regulated business. Many advisers and brokers will be FSA regulated and the FSA will still require them to give best advice, irrespective of the unregulated nature of this product. The NLA’s key facts document is an excellent start and I would like to see it developing to show more detail as to the pricing, fees and rent chargeable. I am also concerned to ensure that the opportunities for the tenant to buyback are well and clearly documented- not least the calculations used to set the option price- but perhaps this might come as we continue to consult on the drafting.”

Further Information

• National Association of Sale and Rentback