The Council of Mortgage Lenders (CML), Citizens Advice and Shelter have called upon the Treasury to allow the Financial Services Authority (FSA) to regulate sale-and-leaseback schemes in order to provide greater protection for consumers.

In a letter to the Economic Secretary, Kitty Ussher, the organisations expressed concern that some of the schemes may not be treating consumers in a fair manner.

Sale-and-leaseback schemes allow owner-occupiers to sell their homes to a company and then to remain in the property by leasing it back. However, concerns about these schemes include the fact that many offer very little security of tenure, and properties are often purchased at a discounted rate without an independent valuation. Some schemes have been criticised for the way in which they treat consumers at a potentially vulnerable time when they may be facing repossession.

Teresa Perchard, Citizens Advice public policy director, said: “This is a growing problem in a completely unregulated sector which we think the Government needs to look at. We have seen a number of cases where people in mortgage arrears and facing the threat of repossession have gone ahead with a so-called mortgage rescue scheme on the understanding this would allow them to remain in their home in the longer term, only to find themselves homeless within a year.

“These schemes can be difficult to understand, and the information about them can be misleading. Usually people will be required to sell their home at much less than its market value and they will have very little security of tenure as a tenant, but this is not always made clear.”