Advertising watchdog slaps 'below market value' firm over discount claims

Tuesday 21st February 2012

An email to property investors offering a hands-free investment, no deposit required and 100% financing, at a ‘fantastic’ £25,000 below market value, has landed its sender in hot water with the advertising watchdog.

The email from BMV Property Direct was headed ‘student investment opportunity’.

It offered ‘luxurious’ one-bed student apartments in Sheffield to investors for £75,000, saying that the market value was £100,000.

A complainant challenged the claims. BMV said its ad had stated ‘hands free investment, no deposit required’ because the property was fully managed by the in-house management company within the development. It said that no deposit was required and that 100% finance was available, because a bridging company provided 100% financing.

BMV also told the ASA that the £100,000 was an estimated market valuation based on recent Land Registry entries. BMV stated that they had not implied this was a RICS valuation report or any other professional report, and they advised all prospective buyers to do their own due diligence before committing to any purchase.

The ASA did not uphold the challenge about ‘hands free investment’ because the property was fully managed and the claim was not misleading.

However, it upheld the complaints challenging statements made that no deposit was required or that 100% financing was available. It said the financial arrangement was not made clear and that in reality the traditional deposit was being replaced with a bridging loan.

It also upheld the complaint about the market valuation. BMV had provided evidence which showed properties sold between 2008 and 2011. The ASA said that properties sold during 2008 achieved a market value of £100,000 but that properties had more recently sold for significantly less.  

The ASA said: “We concluded that the use of an estimated market value figure in the ad, when used together with the text ‘Fantastic 25% Discount. Instant Equity of £25,000’ was misleading, and the reference to a current market value of £100,000 was unsubstantiated.