HouseThese companies buy from homeowners desperate to sell and then allow them to rent the home back again.
This may sound ideal for those on the verge of financial meltdown who do not want to move or reveal their money troubles to others. Some older people have used sale and rent back as a way of raising money fast where they want to downsize but can't sell.
But the schemes have been riddled with problems from the start mainly because some companies paid less than 60 per cent of the market value for properties, while others imposed steep rent increases, and even evicted tenants after a matter of months.
A damning report published by the Financial Services Authority (FSA) shows most sale and rent back transactions were either unaffordable or unsuitable and never should have been sold.
As a result the FSA has referred one firm to its enforcement division while others have either stopped taking on new business or cancelled their permissions. Effectively, this means the entire sale and rent back market is temporarily shut.
Nausicaa Delfas, the FSA's head of mortgage and general insurance supervision, said: "Sale and rent back is often the last resort for struggling homeowners so we expected to see firms treating their customers much better than this report suggests.
"The resulting temporary closure of this market could have been avoided if sale and rent back firms had taken the time to fully understand their regulatory responsibilities and customers' needs. It seems most were more focussed on their own commercial success rather than the welfare of the customers, with one firm even resorting to fraud."
The firms were blasted for a whole host of failures to customers including that many didn't correctly assess appropriateness and affordability, and customers were often rushed into signing an agreement - many of which contained incorrect information and did not meet the FSA's requirements for tenancy agreements.
Many people are finding it increasingly difficult earlier on in retirement to maintain a decent standard of living using their pension alone, and the recession has made things worse with many older people seeing living costs rise as savings income falls.
A priority for most is to remain in the family home, rather than sell up and move to a cheaper property to provide profit which could boost income or clear debts.
This is where
equity release can help. A recent study showed that retired homeowners own property worth £750 billion which can be used to raise cash using an equity release scheme. Such schemes allow older homeowners to take out a loan against the value of their home.
The first annual rise in both total lending and sales of equity release plans since 2007 has been recorded. Total funds released rose 5.4% to £959.6 million - the first rise in four years - while plan sales continued the growth seen in 2010 with a 1.6% rise to 22,366 in 2011, according to Key Retirement Solutions' 2011 Equity Release Market Monitor.
If you need to raise some cash and want to do so using your home, it is important to only look at equity release plans from providers that are members of Ship (Safe Home Income Plans) which offer a "no negative equity guarantee" that ensures you'll never owe more than your home is worth.
There are different types of equity release plans and each will affect the amount of inheritance you leave your family. How much you leave behind depends on how long you live after setting up the scheme and what happens to property prices.
The decision to take out a plan is an important one and shouldn't be considered without taking advice.