McDonnell’s distorted and dangerous version of Right to Buy9:01 AM, 5th September 2019
About 3 weeks ago 35
The FCA (Financial Conduct Authority) have fined a Sale and Rent Back (SARB) landlord, who was also a home finance arranger, nearly £1 million for misleading and defrauding homeowners in financial trouble looking to sell and rent back their properties.
The FCA were investigating the involvement of Mr Gurpreet Singh Chadda in seven sale and rent back transactions between June 2009 and January 2010 through his companies trading as Red2Black Homes and B&L Homes. The fine of £945,277 is a record sum for a sole trader.
The FCA confirmed that Mr Chadda had deliberately misled customers in a vulnerable financial position for personal gain making nearly £700,000 for himself and they had referred the case to West Midlands Police.
Tracey McDermott, FCA director of enforcement and financial crime, said: “Chadda’s misconduct is the most shocking we have seen from a home finance manager. He is a disgrace to financial services.
“He deliberately misled his clients for his own personal gain and then repeatedly and cynically lied to the FCA. Chadda is not fit to work in regulated financial services and he presents a serious risk to customers and lenders alike with his dishonest and unscrupulous actions.
“The unprecedented level of the fine for a sole trader reflects our determination to deprive him of the gains he made as a result of his misconduct.”
Mr Chada falsified valuations telling homeowners their properties were worth less than their real value and some owners only received 38% of the true sale price of their homes.
He also told owners he would be buying their homes, but sold to other investors and committed mortgage fraud through nondisclosure to lenders that the deals were sale and rent back transactions. Sellers were charged huge hidden fees and were also unaware Mr Chadda was receiving the full price for the properties from the purchasers.
The Financial Services Authority (now FCA) acted to stop the sale and rent back market in February 2012 after it found that most schemes were either “unaffordable or unsuitable and never should have been sold”. However the lack of action up to now by regulators has lead to a “Grey Market” where you can still see Sale and Rent back companies advertising through Google.
For more information on Sale and rent back please click on the title of Mark Alexander’s article The History of Buy to Let Sale and Rent Back
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.
Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agentsLearn More