Banned! Misleading guaranteed rent advert must not appear again

An advertisement on a property management firm’s website suggesting that rental income would be guaranteed to landlords has been banned by the Advertising Standards Authority.

The firm is Reliance Property Management Specialists.

In February this year the website www.reliancepropertymanagement.co.uk carried a banner stating: “RELAX, WHILE YOUR RENTAL INCOME IS GUARANTEED! Receive your rent on time, every month, even if your tenant fails to pay”. 

At the bottom of the banner, below an image of a person sunbathing on a deckchair, text stated: “*subject to terms and conditions, please see link below”, while below the banner the page featured an image of a quality mark stamp containing text stating: “GUARANTEED RENT 365 DAYS A YEAR”. 

In addition there were further statements saying: “We guarantee our Landlords rent to be paid each month, whether or not the property is tenanted or empty. (subject to T’s & C’s)” and “We make sure you get the full rent amount you are due each and every month … This effectively means that we are taking away the risk, giving you confidence in your rental income so you can rely on it, whatever happens”.

However, a complainant to the ASA asked whether the claims “GUARANTEED RENT 365 DAYS A YEAR” and “We make sure you get the full rent amount you are due each and every month … giving you confidence in your rental income so you can rely on it, whatever happens” were misleading, because they suggested rent would be guaranteed in all circumstances; and the complainant also suggested the ad did not make clear each significant limitation that applied to the advertised guaranteed rent service.

Upon investigation by the ASA Byblos Harbour Express Ltd, trading as Reliance Property Management Specialists, said it provided a contract template for letting furnished houses, entitled ‘Draft Guaranteed Rent Agreement’, which set out the agreements between landlords, and the tenant, Reliance Property Management Specialists. 

The firm also showed the ASA part of a document titled ‘Agreement for letting furnished dwelling house’, dated February 2018, setting out the two parties: a named landlord and the tenant, Victoria Knight (another property management service under the same ownership as Reliance Property Management Specialists). 

A statement from the ASA says the advertiser “explained they acted as the tenant and then effectively sub-let the property, and therefore the agreement meant they guaranteed to pay monthly rent to the landlord as the tenant. They said that landlords saw the full details of the terms and conditions of the service before signing a contract.”

Reliance Property Management Specialists also provided testimonials from landlord clients.

However, giving its judgment, the ASA said it considered that consumers would understand the claim “GUARANTEED RENT 365 DAYS A YEAR” and “We make sure you get the full rent amount you are due each and every month … whatever happens”, together with the quality mark stamp image, to mean that rent would always be paid to landlords each month by Reliance Property Management Specialists in all circumstances, including if payments from tenants ceased. 

The authority says it also considered consumers would understand that the guaranteed rent was included in a standard contract between landlords and the advertiser, which would act as a third party responsible for managing tenants. 

“However, we did not consider they would understand from the ad that the guaranteed rent was based on an agreement in which Reliance Property Management Specialists became the tenant and then sub-let property to other tenants. We considered that was material information likely to cause consumers to take transactional decisions that they would not otherwise have taken” says the ASA in a critical part of its ruling.

“We considered that the ad particularly emphasised the guaranteed rent service provided by the advertiser. We understood that there were limitations to the guaranteed rent for landlords, for example if their property was uninhabitable. The [ASA’s advertising] Code required that marketing communications made clear each significant limitation to an advertised guarantee (of the type that had implications for a consumer’s rights). 

“While we noted that in some instances the guaranteed rent claims in the ad stated that terms and conditions applied, the ad did not make clear each significant limitation of the guarantee. A copy of the full terms was not made available for landlords to view on the website. Because the significant limitations of the advertised guarantee had not been made clear, we considered that the ad breached the Code.

“We acknowledged the terms of the rent agreement contract between landlords and the agency set out the circumstances in which the guaranteed rent was not paid. The evidence provided by the advertiser also demonstrated that they had continued to pay rent to two landlords during periods when their properties had been empty, or when tenants had defaulted on rent, and they had purchased rent protection insurance for one property. 

“However, the ad did not make any reference to the nature of the guaranteed rent agreement, whereby Reliance Property Management Specialists became the tenant and then sub-let the property. Because that material information had been omitted, we considered that the ad was misleading. We therefore concluded that the ‘GUARANTEED RENT’ claims were misleading.”

The ASA ruled that the ad must not appear again in its current form. 

“We told Reliance Property Management Specialists that each significant limitation of the advertised rent guaranteed service must be made clear in future marketing communications. They must also make clear, when referencing the guaranteed rent in ads, that the agreement involved the letting agent becoming the tenant and then sub-letting the property” concludes the ASA.

The authority also made a similar ruling in reference to Victoria Knight, a company owned by Reliance Property Management Specialists.