Property investment company CBRE has been told to pull one of its advertisements until it can stand up claims about estimated yields.
CBRE’s website promoted a property development in Central London late last year, featuring both estimate rental value and estimated average gross yields.
The yields were listed as high as 4.9 per cent for one bedroom properties, 4.6 per cent for two beds, and 3.8 per cent for three bedrooms.
A complainant challenged the claims at the Advertising Standards Authority, because they disagreed the yields were in line with the market in the local area and could be misleading.
The complainant also claimed that the basis for calculating the estimated average gross yield had not been made clear, which could breach the ASA’s code.
CBRE said that while the building, One Crown Place, was still in construction, so it could not compare rental prices within the building, they used similar buildings they had been involved in such as the Heron, in EC2, as well as reports from the likes of LonRes and Right Move to assess prevailing rent levels across London.
CBRE said showing calculation of yields was not a common industry practice, and the likely target audience – experienced rental investors – would be familiar with rental yields and how they were calculated.
The ASA said that consumers would have expected the estimated yields would have better reflected the local postcode area. It also ruled that because advertising rules say the basis used to calculate any rate of interest, forecast or projection must be apparent immediately, the advert could have been misleading in that respect.
The ASA’s ruling says: “We told CBRE to ensure that similar ads in the future did not quote estimated rental values and average gross yields from letting properties, unless they held adequate evidence to substantiate the claims. We also told CBRE to ensure that the basis used to calculate the estimated rental values and average gross yields were made clear in the ads.”