THE sale-and-rent back market is a relatively new one, but one which is rapidly growing.

It is the process where by companies purchase homes for less than the market value, usually for around 70 to 80 per cent, and then rent it back to the original owner.

Sale-and-rent back schemes could continue to rise in popularity with more people predicted to be facing repossession this year. The Council of Mortgage Lenders predicts there will be 45,000 repossessions in the UK this year, up 27,100 on last year.

Recent figures show a 16 per cent rise in the number of homeowners threatened with repossession in the first three months of this year, making sale-and-rent back schemes an attractive option, for those struggling to settle their existing mortgage and manage outstanding debts.

But with rogue property firms preying on the financially unstable, what should you be looking out for?

Self-made property entrepreneur and investment expert Raj Shastri started his career with £950 and has grown a multi-million pound property portfolio in just five years.

He said: "Rent back schemes can be a life saver with the right company, or a disaster with the wrong one."

Raj believes people considering these schemes should do in-depth research on who they are dealing with before agreeing to any conditions and look at the credentials of the company or individual looking to buy the property, to ensure they are getting the right deal for them.

According to Raj, the scheme has several benefits, including the opportunity to restore financial freedom by paying off debts and possibly leave you in pocket with money left over.

He said: "Firms provide financial privacy so nobody knows you've had to sell your house, your children can remain at the same school and the family doesn't have to face a massive upheaval."

Raj is quick to point out what to watch out for, advising people to avoid one-man operations and speaking to any other customers who have been in the same boat.

He said: "Find out the financial structure and history of the buyer, ask for a minimum contract of how long you will be able to stay in the property and find out if you have the opportunity to buy your house back in the future."

Some property experts have criticised the scheme identifying several drawbacks, including the notion of selling a home for less than it is worth, only to end up paying the equivalent of the new homeowner's mortgage.

In addition, the scheme is unregulated and most do not offer security in terms of long-term tenancy or rent levels so people could end up being evicted altogether.

As a result of the lack of regulation, The Office of Fair Trading is currently investigating the sale-to-rent back scheme.

The study, which will consider whether existing legislation is sufficient, particularly in light of the circumstances in which they are sold, has been welcomed by consumer groups, mortgage lenders and MPs who have voiced concern.

Al Elliot, spokesperson for Homeowners Advice Centre, said: "Certainly people who can no longer remortgage at competitive rates will consider the sale-and-rent back option.

"However, until it is fully reg- ulated and providers are obliged to commit to long-term tenancies, I can not see a time when this would be preferable to re-financing, if the mortgage route was available."

Sale-and-rent back schemes do provide homeowners in financial difficultly with a get-out clause but at what price?

Advice is to do thorough research on providers and consider all your options before taking the plunge