By Paul Lewis BBC Radio 4's Money Box

Some companies that make cash offers for homes of people in debt difficulties are "rip-off merchants", a charity boss says.

Adam Sampson of housing charity Shelter said some pay homeowners only half the market value.

He said others did not honour promises that former homeowners could stay in their property as a tenant for life.

But Glenn Ackroyd of A Quick Sale says the industry helps 20,000 people a year avoid repossession.

These people otherwise would be repossessed and in turn would be homeless and need re-housing. Glenn Ackroyd, A Quick Sale

Talking to Radio 4's Money Box programme, Mr Ackroyd said the whole industry was "worth in excess of �2.5 billion" a year and provided what he called a "market solution" to mortgage arrears.

"These people otherwise would be repossessed and in turn would be homeless and need re-housing. [Instead] they can sell and rent back. They can release equity. And often the rental payments they pay are far less than their previous mortgage payments."

Adam Sampson agreed that the principle of sale and rent back was sound. But he said Shelter came across many problems with it.

Undervalued

"People are being ripped off. We are seeing people who are getting only 50% or 60% of the value of their homes instead of the 70% to 90% they should be getting. Many of the promises that are made that people can stay in their homes for the rest of their lives are not being honoured."

Many of the promises are misleading and that can be dealt with very quickly. Adam Sampson, Shelter Read your comments

And he warned that selling your home to a sale and rent back company may not prevent repossession.

"Some of these schemes are themselves financially unsustainable. We have had people whose homes are being repossessed because the people they sold them too couldn't keep up with their payments."

Both men agreed that the Government should act to regulate the companies involved in sale and rent back. And that was supported by John Socha, Chairman of the National Landlords Association, who is drawing up a Code of Practice for the industry.

"We have concluded that there will be some sort of regulatory body but even if the Government says regulate now it will take two years to do it so we need to do something now."

Adam Sampson also wants swift action.

"We've already written to the Treasury asking them to intervene. They can regulate the financial operation of the business and can look at the advertising. Many of the promises are misleading and that can be dealt with very quickly."

BBC Radio 4's Money Box was broadcast on Saturday, 16 February 2008 at 1204 GMT.