11:31 AM, 21st March 2012, About 10 years ago
Slick property salesman trying to talk investors in to signing up for cheap buy to let homes with ‘instant equity’ will have to prove the advertised discount is real or face the wrath of consumer watchdogs.
One firm – Nottingham-based Property Secrets – has already fallen foul of the Advertising Standards Authority (ASA) for claiming investors could earn £25,999 instant equity when buying apartments.
The ASA upheld a complaint against the firm and found their advertising breached the advertising code as misleading, unsubstantiated and exaggerated.
The email containing the claims is banned and Property Secrets has agreed not to use the term ‘instant equity’ in further marketing.
Property Secrets sent out a marketing email at Christmas stating: “I wanted to highlight a fantastic opportunity we have secured … Having managed to negotiate a substantial discount of 20% per unit offering up to £25,999 instant equity, in one of the UK’s most prosperous cities, it is no surprise we have just 3 left now! … Key Points: 20% OFF Developers [sic] Marked Price … Instant Equity up to £25,999 …”
A complaint was made challenging whether the instant equity claim was misleading and could be proved.
Although Property Secrets provided paperwork showing the amount of discount and sale prices of nearby similar apartments, they also told the ASA that the property industry used ‘instant equity’ to describe the discount offered on a developer’s list price and/or actual sale prices for properties on the same development.
“We considered that consumers were likely to interpret the term ‘equity’ in this context to mean the amount of money they would be left with if they sold the property, once any outstanding mortgage charges had been paid off,” said the ASA.
“We considered that sold prices or independent valuations were not necessarily accurate indicators of how much equity a property owner had in a property and that equity was a nebulous concept which could not be quantified easily.
“Because we had not seen robust substantiation to support the claim “Instant Equity up to £25,999”, we concluded that the claim had not been substantiated and was misleading.”
To report misleading adverts to the Advertising Standards Agency click here.
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