The Office of Fair Trading's (OFT) probe into the sale and rent back sector has been welcomed by Safe Home Income Plans (Ship).
According to Ship, the clarification offered by the OFT will allow people to make an informed decision about their finances.
Ship claims that there is no comparison between regulated equity release plans, which are covered by the Financial Services Authority, and unregulated sale and rent back schemes.
The organisation also wants the OFT to clarify whether housing benefit will be available to those on a sale and rent back plan.
Housing benefit advertisements "give many customers a false sense of security that government housing benefit will be available should they be unable to meet rent payments, but this is not necessarily the case", according to Ship.
In related news, the Centre for Economics and Business Research (CEBR) believes house prices will fall by 40 per cent from their peak value in 2007 unless the government's interventions work.
CEBR said unless lending increases the fall in house prices will continue to accelerate.
“These factors are part of a worrying trend. As lenders are reluctant to lend, this could, in turn, lead to a more drastic fall in property prices. All people considering sale and rent back schemes should think carefully and get legal advice before entering into any scheme. Sale and rent back schemes are not regulated by the FSA and as such do not have the safeguards that regulated contracts have”
