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Market leader 'rent to own' BrightHouse to close 30 stores with job losses

Thursday, 7th February 2019

Brighthouse, UK’s largest retailer for weekly payment ‘rent to own goods’ is to close 30 stores with 350 jobs at risk. The retailer revealed on its website the stores (10% of the chain) will close over the next two months and those employees affected will be transferred to other jobs within the business but it is inevitable there will be redundancies. The announcement comes as the group battle with a pre tax loss of £22million in their last set of accounts.

What’s gone wrong with BrightHouse?

Basically, the shops are mainly based on High Streets which are now struggling with a drop in footfall, high business rates, regulator fines along with orders to pay compensation to its customers. Then you have a price cap on new rules coming on what they can charge their customers. All four of these would challenge any business.

BrightHouse £15million customer compensation 

In October 2017 BrightHouse was ordered to pay 15m compensation to 249,000 customers following a review by the financial regulator the Financial Conduct Authority (FCA). The FCA said BrightHouse was found ‘not to be a responsible lender’ and subsequently ordered to compensate 249,000 customers covering 384,000 agreements.

You can more on this here BrightHouse ordered to pay 15m compensation to 249,000 customers

Mike Thomas head and founder of DebtWizard.com said:

"Tough times ahead but unfortunately there is a need for this type of business of rent to own as the people that use firms like BrightHouse cannot get finance elsewhere as they tend to have poor credit rating which restricts access to cheaper goods at other stores. I welcome the new price cap on the goods but this will have consequences which are seeing here, job losses."

What stores are to close and when?

You can see the full list of stores to close, the dates plus information on what to do if you are a customer of BrightHouse. BrightHouse store closures (External link to BrightHouse)

What is ‘rent to own’ (RTO)?

Rent to own is a scheme whereby a customer can buy washing machines, cookers, tvs etc without having to pay all the money up front instead they pay a small weekly or monthly sum until they own the product outright. This can take between one and three years after which they will then own the product.

The FCA quotes examples where people have paid over £1,500 for essentials like an electric cooker, which could be bought on the high street for less than £300.

New rules coming to restrict the interest on rent to own sector

The Financial Conduct Authority (FCA) have said a price cap on the rent to own sector will come into force on April 1, 2019, providing consultation is agreed which closed on the 17 January 2019. This will severely restrict the interest rates that firms like BrightHouse will be able to charge their customers from April.

Once implemented it will save around 400,000 consumers up to £22.7m a year from excessive charges.

The markets leaders for this type of trade are BrightHouse and PerfectHome, both operate online, and in stores.

Read more Price cap on ‘rent to own’ (RTO) agreed for April 1, 2019

Related reading

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