Summary of Council decision:
Two issues were investigated, both of which were Upheld.
A poster, seen on the London Underground network in November 2022, featured large text which stated, “Black Friday The Shared Ownership Way”. Further text stated, “Brand new and ready-to-move-into homes available from £57,500 for a 25% share. Reserve between 16-30 November for only £99 and receive a £500 John Lewis voucher, plus more exclusive offers!* Find out more lqhomes.com/offers”. At the bottom of the poster, very small text stated, “Prices correct at time of print, based on a 25% of the full market value of £230,000. Terms and conditions apply, for more information please visit lqhomes.com/offers”.
Shared Ownership Resources challenged whether:
1. the promotion was administered fairly, because they believed that a Black Friday offer with various stages that had short deadlines was not suitable for the purchase of a Shared Ownership home; and
2. the conditions of the promotion had been made sufficiently clear.
1. London and Quadrant Housing Trust t/a L&Q said they had given proper consideration to the promotion and they had allowed for sufficient time for consumers to make a decision as to whether to take part in the promotion. They also said that they had made sure all proper checks were in place to avoid a situation where consumers may have taken on too much of a commitment, which they would have regretted at a later date.
They acknowledged that Black Friday was mostly associated with electronics and smaller purchases, but considered that through the years the concept had evolved, whereby consumers expected discounts and special offers to be made available for any product or service. They referenced that other property developers and housing associations also offered Black Friday promotions in 2022, offering up to £50,000 discounts to the market sale price, mortgage support and moving costs. They re-iterated that the ad was intended to promote shared ownership as a viable route to home ownership and that they did not seek to take advantage of impulse purchases over the Black Friday period.
They understood that buying a home was a considerable investment and a decision that should not be taken lightly, especially a shared ownership home which was most often associated with first time buyers. As such, to counteract the potential for an impulse purchase, they said that the Black Friday promotion was available for two weeks. They further highlighted that the ad ran for two weeks prior to the offer being available, which gave potential customers additional time to consider their decision.
L&Q also explained that the deadlines for the exchange of contracts and completion were not implemented specifically for the promotion and that they corresponded with the standard timelines for the purchase of a L&Q shared ownership home. They also stated that those timeframes were used by the majority of the housing association market in the sale of shared ownership properties. Furthermore, in relation to the exchange of contracts, they highlighted that it would take time for a consumer’s solicitor to receive the legal pack, and therefore, in actuality, consumers would have longer than the 28-day period.
They stated that they were aware that unforeseen delays may occur in the process of buying a home and that, as a gesture of goodwill towards their customers, they allowed for additional time to take advantage of the promotion in cases where considerable progress had been made with an application, but the promotional deadline had subsequently passed. That meant certain consumers were still able to claim the offer and the discount. The promotional deadline was extended for 18 individuals and the longest delay they allowed for was an additional 16 days. They considered that demonstrated they did not time pressure their customers who wanted to take part in the promotion. They also detailed the cooling-off period which allowed any customer to pull out of the agreement without incurring any considerable costs. They stated that a shared ownership housing purchase could not be made without proper consideration as all potential customers had to go through the same process as any other house purchase. They said that those wishing to take advantage of the Black Friday offer were subject to the same level of scrutiny and conditions as any other buyer which included affordability checks, background checks, discussions with mortgage lenders as well as having a full appointment with their Sales advisors.
2. L&Q said that their marketing materials made direct reference to their terms and conditions and included a link to the complete set of conditions associated with any particular offer. In the case of the Black Friday promotion, they said that the terms and conditions were available if consumers navigated to the link in the ad because it was not feasible to display all of the terms and conditions for the promotion within the ad. They explained that the purpose of the ad was to direct consumers to the website, and that visiting the website was the only way for consumers to take advantage of the promotion. Because of that, they believed that those consumers who went on to reserve a property would be as likely to navigate to the terms and conditions notwithstanding the medium of the ad. They also highlighted the use of asterisk in the ad which made consumers aware that all offers were taken into consideration subject to property availability.
With specific reference to the terms and conditions of the Black Friday promotion, they said that the offer date of 16 to 30 November featured very prominently in the ad and as such the timeframe of the promotion had been made clear to consumers. They also considered the promotion being conditional upon using their own solicitor and mortgage broker was clearly featured within the terms and conditions available on their website. However, they emphasised that they did not direct consumers to a specific solicitor or mortgage broker, but had compiled a panel of professionals to allow consumers to make their own choice. They also highlighted that all of the professionals on the panel were independent from L&Q and that they adhered to strict consumer codes. Regarding the cooling-off period, they considered that the terms and conditions clearly stated the process. They explained that the cooling-off period was a staggered process with different stages and that it was only after 22 days or more that the full £99 reservation fee was retained by L&Q. They further detailed that during the cooling-off period, consumers could withdraw from the agreement without incurring any additional penalties or payments, other than any potential legal and administration costs suffered by L&Q during that time. They also stated that by giving consumers a two-day cooling-off period, they gave prospective buyers more protection than the industry standard. They also referred to a government advice page which stated that reservation fees were unlikely to be returned to buyers if they decided not to proceed with the purchase.
The CAP Code stated that promoters must conduct their promotions equitably, promptly and efficiently and be seen to deal fairly and honourably with participants and potential participants.
We understood that Black Friday promotions were often time-limited and commonly applied to consumer goods and that they were associated with impulsive purchases on low-risk items. We noted that the ad featured a time-limited Black Friday promotion which consisted of a reduced reservation fee and a £500 John Lewis voucher. We understood that for consumers to be eligible for the promotion, they had to reserve their desired house within a two-week timeframe. Consumers would then adhere to the standard timeline for the purchase of an L&Q shared ownership home; namely, exchanging contracts within 28 days of receiving the legal pack and completing within 10 working days of exchange of contracts if the property was ready for occupation. Once those steps had been completed, participants would receive the £500 John Lewis voucher within 75 days.
We noted the two-week promotional window in which participants had to reserve a home, and considered that, before placing a reservation, participants only had a short timeframe in which to consider taking up a shared ownership agreement. After reserving a property, we considered consumers were financially committed to that decision and, therefore, the following stages of the promotion and subsequent purchase of the shared ownership property. We understood that within the two-week timeframe consumers would have to browse the selection of eligible L&Q shared ownership homes and organise viewings for any show homes which were of interest to them. After that, they would also need to consider whether they wished to proceed with purchasing a shared ownership home. We understood that those who took part in shared ownership agreements were usually first-time buyers, who we considered would likely not be as familiar with the property market and the complexities of shared ownership. We considered that purchasing a home, whether through shared ownership or otherwise, was a serious, complex financial decision and something which required time and thought from consumers, especially first-time buyers. Because of the short timeframe in which consumers had to choose a shared ownership home and commit to purchasing it, we considered that the two-week promotion window meant that consumers could be rushed to make a quick decision on a considered purchase for fear of losing out on the offer.
Whilst we welcomed that L&Q extended the deadline for certain customers, we considered that was done on a case-by-case basis depending on the process of their application and was not necessarily guaranteed to all participants. Furthermore, we acknowledged that L&Q ran the ad for two weeks prior to the promotional offer start date but considered that consumers would not necessarily have seen the ad in the pre-promotional window.
For those reasons, we concluded that the promotion had not been administered fairly and was in breach of the CAP Code.
On that point, the ad breached CAP Code (Edition 12) rule 8.2 (Promotional Marketing).
The CAP Code stated that all marketing communications or other material referring to promotions must communicate all applicable significant conditions or information where the omission of such conditions or information was likely to mislead.
The ad stated “reserve between 16-30 November for only £99 and receive a £500 John Lewis voucher”. We considered that consumers who wished to participate in the promotion would have understood from the information stated in the ad that, in order to take advantage of the reduced reservation fee and receive the £500 John Lewis voucher, they would have to reserve a home within the 16 to 30 November timeframe.
We understood that the voucher would only be received by participants within 75 days of completing the purchase of their shared ownership home. We also understood that after the reservation fee had been made, the exchange of contracts must take place within 28 days of the legal pack being issued. However, that timeline had not been referred to in the ad. Consequently, we considered that the speed at which it was necessary to exchange contracts and complete the sale in order to remain eligible for the voucher had not been made sufficiently clear to consumers.
We also considered that the ad did not make clear the promotional offer only carried a two-day cooling-off period. We acknowledged L&Q’s argument that the cooling-off period was longer than two days because L&Q only retained the full reservation fee after 22 days. However, we understood that the full reservation fee would only be returned to the buyer if they changed their mind within two days of paying the reservation, and only in cases where the legal pack had not yet been sent. Whilst we acknowledged L&Q’s assertion that it was commonplace for reservation fees not to be returned to buyers who subsequently decided against purchasing their reserved property, we understood that the majority of those interested in a shared ownership agreement were first-time buyers, who we considered were likely to be unfamiliar with the process of reserving a shared ownership or property or the intricacies of such an agreement. We also understood that a longer cooling-off period was commonplace when purchasing a new home with a standard mortgage, and because of that, we considered that consumers who were familiar with standard mortgages would likely assume that also applied to the promotion and purchase of a shared ownership home. As such, we considered that was material information which should have been stated in the ad.
Furthermore, we considered that the ad did not specify that participants would have to select a solicitor or mortgage broker from the L&Q approved panel to be eligible for the promotion. We considered that was also significant information which was likely to influence a consumer’s decision to participate in the promotion, and therefore, should have been communicated clearly within the ad.
We acknowledged that the T&Cs of the promotion were linked to from the ad and stated the conditions of the promotional offer. Notwithstanding that, we considered that it would have been possible to include the information in the ad, and given that it was material, the information should have been presented clearly in the ad itself to ensure consumers were able to make an informed decision on whether or not to participate in the promotion.
On that point, the ad breached CAP Code (Edition 12) rule 8.17 (Promotional Marketing).
The ad must not appear again in the form complained of. We told London and Quadrant Housing Trust t/a L&Q to ensure that their promotions were administered fairly and responsibly in future. We also told them to ensure that they communicated all applicable significant conditions in marketing communications referring to promotions, including where the omission of such information was likely to mislead consumers.