Freedom Property's "sale and rent back" failure

We've had news of yet another "sale and rent back" scheme gone wrong.


In 2006, money troubles pushed Philip Becket and his wife into selling their house in Milton Keynes to Freedom Property.

They sold for £95,000 and the house was later mortgaged by Freedom Property boss Andrew Lockley for £120,000.

At first the arrangement worked fine. Lockley told them the house "was theirs" for as long as they wanted it.

[cut to credit crunch]

After six months the rent went up from £600 to £720 a month. After a year the Beckets got a letter from the mortgage lender which warned them that the mortgage was in arrears.

Lockley went into an Individual Voluntary Arrangement, designed to stave off bankruptcy, shortly afterwards.

He planned to sell off some of his property portfolio but the collapsing housing market put the kibosh on that.

Lockley owned 91 properties at the time of the IVA and most have since been repossessed.

Many tenants, he claims, have been allowed to stay on in their properties after the appointment of a Law of Property Act receiver. The receiver takes on the duties of the landlord if the mortgage lender believes they can profit from the existing arrangements.

But other mortgage lenders took a harder line and - as in the Becket's case - went for a repossession order.

Lockley admits his mistakes and that "with hindsight" he would have done things differently.

"This is very hard for the individual people concerned," he said. "I am deeply upset that Mr Becket has received such significant fall out."

In the Becket's case, the £720 a month rent should have been enough to cover the mortgage. But many of Lockley's properties were empty and he couldn't cover the costs of his vast portfolio.

He insists he tried to do the right thing and is facing the repossession of his own home too. That's little comfort for the Beckets who are leaving 25 years of memories behind and are having to find new accommodation in their 60s.

The FSA plans to regulate the sale and rent back sector - Lockley fears they might "strangle" it.

The real need, he says, is for better rights for tenants in the Becket's situation. Currently they have none.