Consumer champions have branded an ‘instant equity’ claim from a property sourcing firm selling to buy to let landlords as misleading, unsubstantiated and exaggerated.
Property Secrets, from Nottingham, boasted investors could make £25,999 instant equity on buying an apartment – but the Advertising Standards Authority disagreed.
After investigating a complaint, the ASA banned an email making the claims as in breach of the advertising code. Property Secrets has agreed not to repeat the term in future marketing.
The ruling could have far-reaching repercussions among property sourcing firms – a Google search of other firms offering ‘instant equity’ below market value property deals returns pages of results.
Property Secrets made the claim in an email at Christmas stating: “I wanted to highlight a fantastic opportunity we have secured … Having managed to negotiate a substantial discount of 20% per unit offering up to £25,999 instant equity, in one of the UK’s most prosperous cities, it is no surprise we have just 3 left now! … Key Points: 20% OFF Developers [sic] Marked Price … Instant Equity up to £25,999 …”
The firm offered the ASA documents showing the amount of discount and sale prices of nearby similar apartments and explained that the property industry used ‘instant equity’ to describe the discount offered on a developer’s list price and/or actual sale prices for properties on the same development.
“We considered that consumers were likely to interpret the term ‘equity’ in this context to mean the amount of money they would be left with if they sold the property, once any outstanding mortgage charges had been paid off,” said the ASA.
“We considered that sold prices or independent valuations were not necessarily accurate indicators of how much equity a property owner had in a property and that equity was a nebulous concept which could not be quantified easily.
“Because we had not seen robust substantiation to support the claim “Instant Equity up to £25,999″, we concluded that the claim had not been substantiated and was misleading.”