The Advertising Standards Authority has banned a property advert after ruling a firm’s claims it could pay homeowners up to 100 per cent market value for their house were misleading.
The ASA investigated an advert on the website of Liverpool-based firm Chris and Leon Buy Houses in September last year.
The advert said that “unlike other companies, we can pay up to 100 per cent market value for your house! … Sell Your House For Cash … Up to 100 per cent of market value … Houses bought for cash … Enter Your Information below to get your FREE CASH OFFER”.
A consumer had complained about the advert and challenged whether the claims around paying full market value could be backed up.
Chris and Leon Buy Houses explained that the best option for customers in negative equity might be a delayed sale model where the firm paid the customer a value equal to the mortgage redemption figure, with a delayed completion spread over several years.
This allowed the house price value to rise to a point where the firm’s purchase of the property would be commercially viable.
In the meantime the mortgage payments, maintenance and costs of the property would be borne by Chris and Leon Buy Houses or one of their partners.
The seller would get a small upfront payment, for example £1, and get the agreed sale price at the end of the delayed completion period.
Chris and Leon Buy Houses said that in some cases they were able to offer the seller greater than 100 per cent of the current market value of their home.
The firm said they based the market value on Land Registry data on nearby house sales and conversations with local estate agents.
Once a client had agreed to sell, they would then order an independent Royal Institute of Chartered Surveyors valuation.
Open to interpretation
However, the ASA decided the meaning of the term “100 per cent market value” was open to interpretation.
It says marketers using the phrase should ensure they made clear in their ads how they would determine the market value of the property.
The ASA says Chris and Leon Buy Houses were not clear about how they set property values.
The regulator says: “In the absence of further detail, we considered consumers were likely to expect that they could sell their property to Chris and Leon Buy Houses for an amount close to what they could achieve if they sold it through the open market.”
The ASA adds that consumers could also be led to believe that they would get cash quickly, which was not always the case.
It says: “Because the ad gave the impression that the claims applied to all house purchases, whereas they only applied to delayed sales, and we saw no evidence that the amount agreed in those circumstances was up to the market value of the property, as it would be understood by consumers based on the information in the ad, we concluded that the claims “we can pay up to 100 per cent market value for your house” and “up to 100 per cent of market value” were misleading.”
The ASA told Chris and Leon Buy Houses to change the advert.
The regulator says the firm’s adverts cannot imply it paid up to market value on all types of house purchases.
The ASA adds: “We also told them to ensure that their advertising explained how they determined market value and to hold evidence to show that the price offered to clients reflected that calculation.”