ASA Adjudication on BMV Property Direct Ltd
15 February 2012
Number of complaints:
An e-mail, delivered on 6 September 2011, had the subject line, "Hands Free Investment No Deposit Required!". The e-mail was headed, "Student Investment Opportunity". The subheading stated "Luxurious 1 Bed Student Apartments in Sheffield .. Hands Free - Fully Let, Fully Managed & Fully Serviced ..". Further text stated "Market Value £100,000, Investor Purchase Price £75,000". Further text also stated, "Limited Availability On This Very Popular Development 100% Finance Available (subject to lender & status)".
The complainant challenged the claims:
1. "Hands Free Investment";
2. "No Deposit Required!";
3. "100% Finance Available";
4. "Market value £100,000".
CAP Code (Edition 12)
1. BMV Property Direct Ltd (BMV) said that the ad stated "Hands Free Investment No Deposit Required", because the property was fully managed by the in-house management company within the development. BMV said the property was fully tenanted via the management company that dealt with all aspects of letting and servicing the property.
2. BMV said the statement concerning "no deposit required" referred to the fact BMV did not take a deposit to secure or reserve properties. BMV said a bridging company provided 100% financing. BMV said the ad stated this was subject to status and lender.
3. BMV said "100% finance available" referred to the availability of short-term bridging loans to provide financing of up to 100%, from an FSA registered loan company. BMV said that company could provide 100% finance subject to customer credit status and market valuation.
4. BMV said the "Market Valuation £100,000" was an estimated market valuation based on recent land registry entries. BMV stated that they had not implied this was a Royal Institute of Chartered Surveyors (RICS) valuation report or any other professional report, and they advised all prospective buyers to do their own due diligence as well before committing to any purchase.
1. Not upheld
The ASA noted that BMV said the reference to a "Hands free investment" was made because the property was fully managed by the in-house development management company, which dealt with all aspects of letting and servicing the property, including finding tenants. We considered that members of the public would understand a "hands free investment" to be one with which they did not need to actively manage or be involved.
We considered that the involvement of an in-house management company meant that customers would not need to be actively involved with their investment, and the statement in the ad "Fully Let, Fully Managed & Fully Serviced" supported that impression and was not misleading.
On this point, we investigated the ad under CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 3.7 (Substantiation) but did not find it in breach.
2. & 3. Upheld
We noted that BMV stated that it did not take a deposit to reserve or secure a property, and that a finance company provided short-term bridging loans of up to 100% financing, subject to customer status and property valuation. BMV said that the ad contained the statement "Subject to Lender & Status", and that finance availability in property purchase transactions was always subject to the applicant's own circumstances and credit status.
We considered that the ad text "No deposit required" did not make sufficiently clear to consumers the financial arrangement into which they would potentially enter if they purchased a property. The ad did not refer to the need for those who opted to seek 100% finance to enter into an arrangement with a finance company for a short-term bridging loan to obtain finance for the purchase. We considered this arrangement meant the traditional deposit which the ad said was not necessary was in reality replaced with a bridging loan
Although we considered that consumers might understand that the potential availability of property purchase finance was normally subject to valuation and borrower circumstances and credit status, we also considered that the ad was not sufficiently clear about the method of obtaining 100% finance which was being offered. We considered that the ad should have clearly stated both the relationship of BVM with the credit provider, and that the offer of finance was based on an initial short-term bridging loan. We noted that a bridging loan was a secured loan and similar, in that sense to a mortgage. However, we considered that the need for a bridging loan represented a significant condition of which consumers should have been made aware in the ad. We further considered that the ad, which described the property throughout as an investment opportunity, should have made clear that the loan would be a buy to let bridging loan, rather than a residential bridging loan or any other type of loan.
We concluded that the use of the phrase "No deposit required" was misleading and that the absence of reference to the short-term bridging loan in connection with the statement "100% Finance Available" was misleading.
The ad breached CAP Code (Edition 12) rule 3.1 and 3.7 (Misleading advertising).
We noted that BMV said its market valuation was estimated, and based on recent market sales and land registry entries. BMV provided evidence which showed properties sold between 2008 and 2011. We considered that properties sold during 2008 achieved a market value of £100,000, but that more recently properties sold for amounts significantly less than £100,000. We concluded that the use of an estimated market value figure in the ad, when used together with the text "Fantastic 25% Discount. Instant Equity of £25,000" was misleading, and the reference to a current market value of £100,000 in the ad was unsubstantiated.
The ad breached CAP Code (Edition 12) rules 3.1 and 3.7 (Misleading advertising).
The ad must not appear again in its current form.