Sale and Rent Back Schemes

A sale and rent back scheme is one in which a home-owner (commonly someone facing financial difficulties) sells their property to a third party on terms that permit them to remain in occupation as an assured shorthold tenant. Following concerns about abuse, such schemes were brought within the scope of the Financial Services and Markets Act 2000, with the consequence that only approved providers could offer such schemes; a sale and rent back arrangement made by or on behalf of an unapproved person is unenforceable (s.26, 2000 Act).

In the case of Odhavji v Tighe and others [2025] EWHC 372 (Ch), Ms Odhavji owned a house in which she lived with her husband. She got into financial difficulties and sold her property to Ms Tighe. They then agreed that Ms Odhavji would become the tenant of Ms Tighe at the same property. In due course, Ms Tighe brought a claim for possession which Ms Odhavji resisted on the basis that the transaction was a sale and rent back arrangement and, because Ms Tighe was not approved to offer such products, that the transaction was void. The Circuit Judge rejected that argument and made an order for possession.

The High Court dismissed an appeal. The judge had concluded that there was insufficient evidence to support the allegation that this was a sale and rent back arrangement. Having considered the evidence from Ms Odhavji’s solicitors’ conveyancing file, it appeared that the sale was on terms which secured vacant possession and there was no entitlement to remain as a tenant; indeed, her solicitors had expressly challenged the suggestion that she would be remaining in occupation. The evidence therefore did not support the proposition that this was a sale and rent back arrangement. It was a sale, followed by an unconnected decision to rent the property.

Oliver Kew

Published on 14/05/2025