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:
Service charges: what you need to know
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.
Related posts:
Advertising Standards Authority again rejects complaint that McCarthy and Stone is passing off leasehold tenancies as ‘property ownership’
Keep raising leasehold with Advertising Standards Authority
Advertising Standards Authority rules against Notting Hill Genesis on over-egged shared ownership adverts
Complain to Advertising Standards Authority over ‘virtual freehold’ and ‘home ownership’ when the offer is leasehold tenancy
Notting Hill Genesis housing association pulls shared ownership leasehold advert after complaints
Esther McVey hints at new era of friendly cross-party consensus in Commons debate
Why do the Standards Authority allow M&S to get away with “Home Owners” and “Home Ownership”.
Several complaints have been turned down.
Michael – you are so right! I’ve made several complaints to the ASA, about both McStone & Churchill. They are always rejected. Here is their justification for the latest, sent to me on 18th September:
Your Complaint: McCarthy & Stone Lifestyles Ltd
Thank you for contacting the Advertising Standards Authority (ASA).
I understand that, as with your previous complaints to us, you challenged that the marketing of leasehold properties in terms of “ownership” was misleading, as buying such a property only grants the purchaser right to live there for the length of the lease. In this case you pointed to an ad for McCarthy & Stone leasehold properties that appeared in the June 2019 edition of Saga, which described these properties in terms of ‘ownership’.
You then brought to our attention the recommendations made in the House of Commons, Housing, Communities and Local Government Committee
Leasehold Reform Report, published 11 March 2019, as this recommended that it would be more appropriate to refer to leasehold property tenure as ‘lease-rental’, rather than ownership.
I acknowledge your concerns, however I should advise you that our view on this issue has not changed. The omission of information about the terms, costs and remaining lease tenure of leasehold properties may cause ads for them to be considered misleading (and you may be interested to know we are currently involved in ongoing discussions with The National Trading Standards Estate Agency Team about how we might bring about better compliance for such ads with the existing guidance on what constitutes material information in the context of a property sale), however we still consider using terms relating to ownership to describe leasehold properties is unlikely to be materially misleading by itself.
We note the published Government response to the report you highlighted stated “The Government is clear that leasehold is a legitimate form of home ownership. While leaseholders own the right to occupy a property for a fixed number of years, as set out in the lease, they are homeowners and have different rights and obligations to those who rent. Alongside having a home to live in, leaseholders have bought an asset which they can sell on in future and using the term ‘lease-rental’ could risk perpetuating a misconception that they are not truly homeowners. It also risks undermining future sales of leasehold properties for existing owners.”
We consider this supports our view that it is not unreasonable to describe possession of a leasehold property as ‘ownership’, and that the use of phrases referring to ‘ownership’ made in relation to leasehold properties is by itself unlikely to mislead consumers that such properties are freehold. We will therefore not be considering this matter further.
Thank you once again for contacting us.
Kind regards
Duncan Hobbs
Duncan Hobbs
Complaints Executive
I agree whats the difference with this advert and McArthy and Stone selling ‘home ownership’ when clearly it isnt!!!
Lesley, Note the way they refer to “Home Owners Lounges” in order to create the impression of “home ownership” without being explicit?
I also agree.
The ASA have in the past brushed these complaints under the carpet.
Hopefully they now realise, as the problem has become more public knowledge, they have to face the facts and take action.
I know it is extra work but it may be advantageous if anyone has had a complaint turned down in the past to resubmit the same/similar complaint again to the ASA
Silly complaints like this do nothing to assist the campaign against unfair leasehold sales, and merely distract attention from the main goals of the campaign. They make the campaigners look like whingeing children.
The ASA were quite right to dismiss such complaints, as they quite correctly assume a basic level of intelligence and common sense amongst people who are potential customers for the properties. For most people, the word `ownership’ is more or less synonymous with `possession’ – if they’re leasing their car they still refer to it as `my car’. The fact that they can sell the property on, often at a substantial profit, entirely supports that view – if they didn’t `own’ it, how could they sell it?
Everyone who buys such a property employs a solicitor / conveyancer, and even those that are corruptly in league with the developers will explain the basic concept of a lease and payment of service charges. But these complaints seem to assume that the poor, innocent buyer just hands over hundreds of thousands of pounds without having a clue what they’re actually buying, which is not only extremely patronising but absurd nonsense.