The complaint centres around a poster on the London Underground in November 2022, with larger text stating “Black Friday: The Shared Ownership Way”.
It described that there were “brand new and ready-to-move-into homes” available from £57,500 for a 25 per cent share and urged people to reserve between 16 and 30 November for only £99.
Applicants would also receive a £500 John Lewis voucher and there would be other “exclusive offers”.
Small print at the bottom of the ad said that prices were correct at the time of print and that terms and conditions may apply.
Shared Ownership Resources, the group who brought the complaint, challenged whether the promotion was administered fairly as a Black Friday offer with various stages with short deadlines may not be suitable for the purchase of a shared ownership home. It added that the conditions of the promotion were not made sufficiently clear.
A tight timeframe
ASA said that consumers who wished to participate in the promotion would have to reserve a home within the 16 to 30 November timeframe.
It added that the voucher was only valid within 75 days of completing the purchase of the shared ownership property and after the reservation fee has been paid, 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 consumer,” it explained.
The ASA added that the ad did not make it clear that 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,” the trade body added.
ASA said that it acknowledge L&G’s assertion that it was “commonplace” for reservation fees to not be returned to buyers who later down the line decided not to buy the reserved property.
However, the firm said that most of those interested in shared ownership were first-time buyers who are “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,” it explained.
Material information not included
ASA continued that the ad did not specify that ads 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,” it added.
ASA said that while terms and conditions of the promotion were linked to from the ad, it was possible to include the information in the ad itself given it was “material” and it 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”.
The trade body said that the ad must not appear again in the form complained of and it had warned 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,” it noted.
‘Trivialising the home buying decision’
Sue Phillips, founder of the Shared Ownership Resources project, said: “To promote homebuying – one of the most risky and expensive purchases most people will ever make – by hijacking a marketing slogan associated with TVs, mobile phones, kitchen appliance, beauty products and the like trivialises the decision”.
“If shared owners encounter financial difficulties down the line, they often encounter a ‘caveat emptor’ (buyer beware) response from the social housing sector. It’s not uncommon to be told they didn’t ask the right questions, or that their solicitor is to blame.
“But the ASA ruling demonstrates that housing associations don’t necessarily give people considering shared ownership the facts they need to make informed decisions, or the time to undertake meaningful due diligence.”
She continued: “Of course, just because a two-day cooling-off period and non-refundable reservation fees are widespread for shared ownership schemes doesn’t mean this is right, or equitable. Shared owners are extremely disadvantaged – they do not have the same rights and access to redress as other homebuyers.
“For example, shared ownership is still excluded from the New Homes Quality Code published by the New Homes Quality Board (NHQB) in 2021”. The ASA noted that: ‘a longer cooling-off period was commonplace when purchasing a new home with a standard mortgage’.”
