A family who were about to lose their home to a sale-and-rent-back scheme have won a landmark ruling that will allow them to stay in the property for life.

Paul and Amanda Jackson, who had lived in their property in Shrewsbury since 1984, had entered into a sale-and-rent-back scheme with a company called Repossessions Stopped after getting into mortgage arrears. They were told by the firm that they could remain in the property indefinitely.

But in 2007, just two years after the arrangement was set up, they received an eviction notice after the company failed to keep up with its mortgage payments on the property.

However, a judge at Birmingham County Court ruled last week that the family could stay in the property for life, with them either taking out a new mortgage and becoming the owners, or through renting the property from the mortgage lender who had repossessed it.

Shelter, the charity that took the case to court on behalf of the Jacksons, said it was the first ruling of its kind.

John Gallagher of Shelter said: "This is a huge and important victory for not only the Jackson family but everyone who is tempted by sale-and-rent-back schemes.

"I would urge anyone having mortgage difficulties to seek independent advice from Shelter, a Citizens Advice Bureau or other debt counselling organisations before contacting these kind of companies."

Last year the Office of Fair Trading (OFT) warned that sale-and-rent back deals, which involve individuals selling their home at a discount and renting the property for a set period, could cause “serious harm” to vulnerable homeowners.

Some companies pay less than 60 per cent of the market value for properties, while others levy steep rent increases and some evict people after just 12 months.

The FSA, the City watchdog, only started to part-regulate the firms this month, with full regulation not expected until next year.

Steve Brooker of Consumer Focus said: “There is a lot of confusion about these schemes, as many people think they are protected in the same way as equity release. While interim regulation is welcome, the FSA must ensure robust measures to protect customers are put in place as soon as possible.”