By Harry Scoffin
The Advertising Standards Authority has waded into the leasehold scandal once again with a new intervention that puts pressure on developers to refrain from marketing controversial leasehold tenancies as home ownership.
The advertising watchdog has accepted that developer Crest Nicholas may have used misleading language on a hoarding for its Bond House scheme in New Cross, south-east London.
There is even the suggestion that the plc housebuilder could have breached the advertising codes.
Most consumer homebuyers are not aware that they are buying a long-term tenancy when they opt for leasehold flats.
The complaint was lodged by Sam Taylor, a London-based member of the National Leasehold Campaign who has been stung by sky-high service charges on his development. He says they are almost double the estimate provided by the developer’s sales team just two years ago – a tactic LKP has criticised in the past:
The boom in luxury flats in London has spawned a trend for hotel-style apartments: all-singing, all-dancing blocks that let you live like the star you know you are, with a 24-hour concierge service, pool, spa, gym, cinema room, library, residents’ lounge, car lift and golf simulator.
Mr Taylor had challenged the wording of Crest Nicholson’s advertisement which said “5% Deposit + 55% Mortgage + 40% Loan = 100% Yours”.
The ASA said it has since raised the matter directly with Crest Nicholson and has “provided guidance to them on the areas that require attention, together with advice on how to ensure that their advertising complies with the Codes in future.”
The ASA stopped short of a full ruling against Crest Nicholson.
Earlier this year the ASA made headlines for slapping down housing association Notting Hill Genesis over the language it had used for a shared ownership London underground promotion.
Notting Hill initially refused to back down and was sucked into the debate over whether leasehold constitutes home ownership, telling the Daily Telegraph that “leaseholders have always been, and still are, homeowners.”
In the original complaint against Crest Nicholson’s Bond House scheme, filed in early September, Mr Taylor said:
“The advert in the image below – on display at New Cross Gate railway station – is for Crest Nicholson, a property developer. They are selling flats in London. The advert reads ‘Look behind you. Your new home is closer than you think. 1 Bedroom Apartments from £415,950. Available with a 5% deposit of just £20,798 using the Government Help to Buy London scheme why not visit our show home and marketing suite today.’
“At the bottom of the advert there is some ‘arithmetic’; showing the costs of the home. It says: ‘5% Deposit + 55% Mortgage + 40% Loan = 100% Yours’
“While this may seem like a nice simple strapline – and even at first sight seems quite informative – I think this is very misleading, and verges on mis-selling. The properties in question are leasehold so are never “100% Yours” – in fact, you simply buy the right to inhabit the property – it is never “yours” at all. There is no mention of the fact that the flats are leasehold, and no mention of ground rent, service charge or anything else.”
Last week, the ASA responded:
“Dear Mr Taylor,
“Thank you for contacting the ASA with your complaint about Crest Nicholson.
“We have assessed the issues you raised, and consider there may have been a breach of the Advertising Codes. We have taken steps to address this.
“We have explained your concerns to the advertiser and provided guidance to them on the areas that require attention, together with advice on how to ensure that their advertising complies with the Codes in future.
“Thank you once again for taking the time to raise your concerns with us. Comments such as yours help us to understand the issues that matter to consumers and we will keep a record of your complaint on file for use in future monitoring. If you would like more information about our complaint handling principles, please visit our website.”
Speaking to LKP, Mr Taylor says:
“I’m pleased to see the Advertising Standards Authority taking complaints like these seriously.
“As a resident of a new-build leasehold estate where many properties were sold using the government-backed Help To Buy scheme, I have first-hand experience of many people who feel that developers misrepresent what they are buying.
“If everyone takes a few minutes to report adverts like this then developers are held to account and are forced to clean up their act.”
The ASA could not be immediately reached for comment.