Watchdog probes advertising for part-rent part-buy homes

The Advertising Standards Authority has stepped in to investigate allegations about advertising for shared ownership homes. 

In 2021 an advertisement appeared on the National Housing Federation website, claiming that shared ownership was “another way to buy your home. You buy a percentage and pay rent on the rest”.

Another organisation - Shared Ownership Resources, described by the ASA as “a campaigning platform” - challenged the advertisement on three grounds:

1. the claims “…part rent, part buy…” and “It’s yours” were misleading because they exaggerated the level of ownership attained by those who took on a shared ownership arrangement;

2. the claim “You can usually staircase … all the way up to 100%” was misleading because they understood that “staircasing” was uncommon; and

3. the ad misleadingly omitted information relating to the costs of extending a lease, particularly once there were fewer than 80 years remaining.

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The ASA upheld the complaint for point 1, saying that references in the ad to “it’s yours” wrongly suggested that someone owning a part of the property would have the same rights as an outright owner.  The ASA says: “We also understood that there were potential risks that existed with Shared Ownership which would not exist for those purchasing a property outright. Specifically, Shared Ownership schemes were, in the eyes of the law, considered to be ‘assured tenancies’. That significantly reduced a buyer’s protection in repossession proceedings where there had been a breach of the lease, such as where a consumer defaulted on their payment to the landlord. Moreover, where a landlord repossessed a property subject to a Shared Ownership lease, the buyer was at risk of losing their equity in the property (the amount they had paid to date to ‘buy’ a share of the property, including any additional share purchased via staircasing).

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On point 2 the ASA did not uphold the complaint. It says: “We considered that consumers would understand in the context of the ad, that ‘usually’ referred to the fact that, in most cases, the relevant scheme would allow consumers to purchase 100 per cent of the property, and that there might be some exceptions where the maximum percentage allowed would be lower.”

And on point 3, the ASA upheld the complaint. The authority comments: “We considered that the cost of renewing the lease would potentially be significant, and while costs would be different in each case, information on those costs was likely to be material to consumers when deciding whether or not to participate in the Shared Ownership scheme. Given that the site had dedicated sections relating to what costs were involved and what was a leasehold property, and given the potential significance of the costs of renewing a lease, the ad could and should have included information making clear that those costs could be significant, as well as information relating to the marriage value and the increasing cost of renewal as the lease length reduced.”

The authority concluded that the ad must not appear again in its original form.