A study by Safe Home Income Plans (Ship) claims that many sale and rent back products offer little security, and that there is no guarantee tenants will be allowed to stay in the property.
The schemes involve a private company buying a property for a person below market value before renting it back to them via an assured short hold tenancy.
However, Ship has made it clear to consumers that such products are distinct from regulated equity release schemes, which give tenants security of tenure and no monthly rent.
Andrea Rozario, Ship director general, said: "Whilst we acknowledge that there may some ethical sale and rent back companies, we are concerned about the number of providers who are making misleading claims in their advertising."
The news comes after reports that the amount of buy-to-let mortgages available shrunk by almost a quarter in one week, according to moneysupermarket.com.
