Summary of Council decision:
Two issues were investigated, both of which were Upheld.
The website for Victoria Knight www.victoriaknight.co.uk, a property management service, seen on 28 February 2018, featured a web page with information for landlords titled “Why choose us?”. The page featured text stating “The Opportunity For Rent Guarantee. We are one of the few Letting Agents in the country who offer Rent Guarantee with professional working tenants. Our Rent Guaranteed service offers the assurance of a fixed monthly rental income without all the hassles involved in being a Landlord. Find out more about our Rent Guarantee service and the terms and conditions, please contact us”.
The complainant challenged whether:
1. The claims “we … offer Rent Guarantee” and “Our Rent Guaranteed service” were misleading because they suggested rent would be guaranteed in all circumstances.
2. The ad did not make clear each significant limitation that applied to the advertised guaranteed rent service.
1. & 2. Smartinvest Capital Ltd t/a Victoria Knight provided a contract template for letting furnished houses, entitled Draft Guaranteed Rent Agreement, which set out the agreements between landlords and the tenant, lettings company Reliance Property Management Specialists, which was under the same ownership as Smartinvest Capital Ltd. They also provided the first page of a document titled ‘Agreement for letting furnished dwelling house’, dated February 2018, setting out the two parties: a named landlord and the tenant, Victoria Knight (another property management service under the same ownership as Reliance Property Management Specialists). The advertiser explained they acted as the tenant and then effectively sub-let the property, and therefore the agreement meant they guaranteed to pay monthly rent to the landlord as the tenant. They said that landlords saw the full details of the terms and conditions of the service before signing a contract.
They also provided an example of a rent recovery insurance policy purchased by Victoria Knight for a property in Stratford, London. They said they took that cover for each tenancy and it allowed them to guarantee the rent. The policy stated it provided rent protection for a monthly rent of £1,210, and covered payment of legal expenses involved in pursuing a tenant for vacant possession. It also said the cover allowed the letting agent to make a claim for non-paid rent where the tenant had defaulted.
Victoria Knight provided emails from two client landlords who they had asked to confirm that their rent was guaranteed. One landlord confirmed they had continued to receive rent when their properties were empty and when rent was not paid by one particular tenant, and they also had not paid court fees to evict that tenant. The second landlord stated that they had been on the Rent Guarantee Scheme for two years and their rent had continued to be paid when their flat in Stratford was vacant. We received invoices showing that the rent had been paid continuously in their property.
Victoria Knight said they had now amended the claims on the website and believed that they adhered to the Code.
1. & 2. Upheld
The ASA considered that consumers would understand the claim “we … offer Rent Guarantee” to mean that payments of rent to landlords were covered by a particular guarantee, and “Our Rent Guaranteed service” would be interpreted to mean that rent would always be paid to landlords each month by Reliance Property Management Specialists in all circumstances, including if payments from tenants ceased. We considered that consumers would be likely to find the meaning of those two claims together ambiguous in that context, because the ad did not clearly distinguish between offering a guarantee and suggesting that a certain level of rent each month was guaranteed. We also considered consumers would understand that the guaranteed rent was included in a standard contract between landlords and the advertiser, who would act as a third party responsible for managing tenants. However, we did not consider they would understand from the ad that the guaranteed rent was based on an agreement in which Victoria Knight became the tenant and then sub-let property to other tenants. We considered that was material information likely to cause consumers to take transactional decisions that they would not otherwise have taken.
We considered that the ad particularly emphasised the rent guarantee provided by the advertiser. We understood that there were limitations to the guaranteed rent for landlords, for example if their property was uninhabitable. The Code required that marketing communications made clear each significant limitation to an advertised guarantee (of the type that had implications for a consumer’s rights). While we noted that the ad stated that terms and conditions applied to the rent guarantee, it did not make clear each significant limitation of the guarantee, and a copy of the full terms was not made available for landlords to view on the website. Because the significant limitations of the advertised guarantee had not been made clear, we considered that the ad breached the Code.
We acknowledged the terms of the rent agreement contract between landlords and the agency set out the circumstances in which the guaranteed rent was not paid. The evidence provided by the advertiser also demonstrated that they had continued to pay rent to two landlords during periods when their properties had been empty, or when tenants had defaulted on rent, and they had purchased rent protection insurance for one property. However, the ad did not make any reference to the nature of the guaranteed rent agreement, whereby Victoria Knight became the tenant and then sub-let the property. Because that material information had been omitted, we considered that the ad was misleading. We therefore concluded that the “Rent Guarantee” and “Rent Guaranteed service” claims were misleading.
The ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), 3.9 3.9 Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify. (Qualification) and 3.54 3.54 Marketing communications must make clear each significant limitation to an advertised guarantee (of the type that has implications for a consumer's rights). Marketers must supply the full terms before the consumer is committed to taking up the guarantee. (Guarantees and after-service sales).
The ad must not appear again in its current form. We told Victoria Knight that each significant limitation of the advertised rent guarantee service must be made clear in future marketing communications. They must also make clear, when referencing the rent guarantee in ads, that the agreement involved the letting agent becoming the tenant and then sub-letting the property.