The new sale and rent back regulatory scheme, which comes in from next week (1 July) will dramatically reduce the number of SRB operators in the market, a lawyer told me this morning.
That's fair enough you might suppose - the regulatory fees will range from £1,500 to £12,000 per SRB company - and after all, dodgy operators are bound to be put off by a scheme that is trying to weed them out. A lot of the cowboys will just retreat underground, decide it is no longer worth the bother, and the residential world will be better off for it.
But when he predicted that the number might drop from 1,000 players in the market to only 25 by August, I was genuinely surprised.
The government might have said the sector was full of "dodgy deals", but unless my maths is wrong, that means only 2.5% of SRB companies or investors are happy to continue their business after paying the charge, to meet minimum standards, and to be openly and formally regulated.
It makes you worry about the standard of the other 975.
Hi Helen,
Actually, the latest statistics from the FSA confirm there will be less than 10 SRB companies that will get regulated, not 25.
The reason for such a significant drop is that mortgage funding is no longer allowed in SRB. This sector was dominated by individual investors buying the properties using buy-to-let mortgages. Now that the regulations prohibits this funding type, only the big players with liquid cash are left.
We will be posting a lot of updates on our site rent back my property during the month of July as the FSA continues to clarify things further.