The Office of Fair Trading (OFT) has launched a study into the process of sale and leaseback.

Sale and leaseback is when a vendor sells their property, sometimes at a reduced rate, under the provision that they are able to lease the property back off the buyer for a mutually agreed period of time.

This process is starting to come to greater prominence due to the current market conditions. With an increasing number of people feeling the financial strain, those faced with the threat of repossession are looking to sale and leaseback as a way of paying off their current mortgage, while still being able to remain in their own home.

Concerns have been raised regarding sale and leaseback, which centres around the vulnerability of the vendors, who could be seen as the most vulnerable in the housing market. It is therefore important that they are fully aware of the agreement that they are entering into and where that leaves them in the long-term.

Jonathan Marciano, press officer with the OFT, told PIN: “The OFT’s investigation will aim to collect further evidence on whether or not homeowners entering into sale and leaseback arrangements are making informed choices, and whether existing protection for such consumers is adequate. If the OFT finds that existing protection is not sufficient for any consumer detriment it identifies, it will consider what further action will be suitable to remedy these concerns.”