Background
This Ruling forms part of a wider piece of work on promotional offers on retirement properties, identified for investigation following intelligence gathered by the ASA. See also related rulings published on 13 November 2024.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A national newspaper ad published on 18 April 2024 for Pegasus Homes, a retirement property company, featured text that stated, “Living at Fitzjohn’s is now as easy as one, two, three. Simply choose from one of our three exclusive offers […] Buy from £1,995,000. Rent from £8,500pcm […]”. Further text stated, “Option 1: Stamp Duty paid* Option 2: Save 5% off the asking price Option 3: 50% off the service charge for 10 years**”. Small text at the bottom of the ad stated, “Terms and Conditions apply. Offers are available on selected apartments only and will be paid on completion. *The Stamp Duty offer does not include any additional or incremental Stamp Duty payments payable by investors or those who will result in owning more than one home as a result of this purchase or any additional Stamp Duty payable by overseas purchasers. **50% service charge will be discounted at the rate applicable at the point of reservation and deducted from the completion statement. Purchasers must complete by 30th June 2024. We reserve the right to extend, reintroduce or amend any such offer as we see fit at any time. Prices correct at time of print. Please speak to our sales team for more information.”
Issue
The ASA challenged whether the:
1. conditions of the promotion had been made sufficiently clear; and
2. ad misleadingly omitted information regarding the price for the service charge.
Response
1. Pegasus Homes Ltd said Fitzjohn’s was a luxury, boutique development of 29 apartments located in Hampstead and exclusively for those aged over 55 years. They said the buyer demographic was typically wealthy retirees with generational and acquired wealth, and that all purchasers at Fitzjohn’s to date had been cash purchasers and who were not reliant on selling a property to complete the purchase.
They said the promotion offered customers a choice between having their Stamp Duty Land tax paid, having a 5% discount off the purchase price or 50% off the service charge for 10 years. They said to help customers make a choice, the sales team informed them of the likely best financial deal for each apartment.
The ad included a qualification that stated, “Terms and conditions apply. Offers are available on selected apartments only and will be paid on completion. Purchasers must complete by 30th June 2024. We reserve the right to extend, reintroduce or amend any such offer as we see fit at any time. Prices correct at time of print. Please speak to our sales team for more information.” The closing date was clearly stated, and they believed the qualification was sufficient in communicating applicable conditions and restrictions. They accepted that the text size of the qualification was smaller than the main body copy, but considered it was still clearly legible.There was also a direct web link, QR code and phone number for customers to access alternative sources of information where conditions of the promotion were stated. Additionally, when customers enquired with the sales team and visited the sales suite, the incentive details and any terms that applied were discussed in detail. If the customer went ahead and utilised the incentive, there was an addendum to their reservation contract that gave details on the incentive and any terms that applied. They provided a copy of that wording.
2. Pegasus Homes said the service charge price depended on the apartment customers wished to purchase. It was calculated on a pound per square foot basis. As each apartment differed in size, the service charge price would also differ. The service charge for each apartment was included in the price list which was given to customers at the point of enquiry and discussed by the sales team.They said the current service charge for Fitzjohn’s was £14.52 per square foot, but that it could increase or decrease each year. The price of the service charge was not omitted to mislead customers. It was not included, however, because the concept of a service charge was difficult to portray to customers who would have most likely lived in a freehold property for all of their lives. They said they preferred to discuss the specifics of the service charge with their customers in person.
Assessment
1. Upheld
The CAP Code stated that all marketing communications or other material referring to promotions must communicate all applicable significant conditions or information where the omission of such conditions or information was likely to mislead, including a prominent closing date if applicable.
The ASA considered consumers would understand from the claim, “Simply choose from one of our three exclusive offers […] Option 1: Stamp Duty paid* Option 2: Save 5% off the asking price Option 3: 50% off the service charge for 10 years**” that if they purchased a Fitzjohn’s apartment, they would qualify for one of those offers.The ASA understood that to be eligible for one of those offers, consumers had to have completed the purchase of an apartment by 30 June 2024.We acknowledged that the ad stated, “Purchasers must complete by 30th June 2024”. However, we considered this wording appeared in very small text at the bottom of the ad, and therefore it could be overlooked. We considered that the duration of the promotional period and the speed at which it was necessary to complete the sale of the property was information likely to influence consumers’ understanding of, and decisions about, the promotion. They were therefore significant conditions which should have been stated prominently in the ad.
Additionally, because the asterisk that linked to that wording was only alongside the claim that related to receiving 50% off the service charge for 10 years (option 3), and not the offers about having the Stamp Duty paid or 5% off the asking price, which came before it, it was therefore ambiguous as to whether the terms and conditions, including the closing date specified in the small text, applied to all three promotional options.
We acknowledged that the small text stated, “Terms and Conditions apply. Offers are available on selected apartments only […] Please speak to our sales team” alongside a QR code, website and telephone number. Notwithstanding that we considered the text was small and could be overlooked, we understood that the QR code and website were not specific to where the terms and conditions could be found. We had not seen the full terms and conditions of the promotion.
We understood that to be eligible for 50% off the service charge for 10 years or 5% off the asking price, consumers had to have two weeks in between exchanging contracts and completing on the sale of the property. We considered that was a significant condition which was likely to affect consumers’ understanding of the promotion and their decision to participate. We therefore considered the omission of significant conditions from the ad was likely to mislead.
We concluded that because the ad had omitted significant conditions, including a prominent closing date, the ad breached the Code.
On that point, the ad breached CAP Code (Edition 12) rules 8.17, 8.17.1, 8.17.4 and 8.17.4.a (Promotional marketing).
2. Upheld
The CAP Code stated that quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. It also stated that if a tax, duty, fee or charge could not be calculated in advance, for example, because it depended on the consumer's circumstances, the marketing communication must make clear that it was excluded from the advertised price and state how it was calculated.
We understood that the service charge was a non-optional, ongoing fee for maintenance of the Fitzjohn’s development. We acknowledged that because the service charge was calculated on a pound per square foot basis and the apartments varied in size, the price depended on the apartment a customer wished to purchase.We noted that Pegasus Homes preferred to discuss the service charge with customers in person. However, the ad contained no information about the price of the service charge or how it was calculated, such as the price per square foot. We also understood that the price of the service charge was subject to an annual review. Although we acknowledged that the ad included the “Buy from” price, we considered the price of the service charge was material information of which consumers should also have been made aware.Because the service charge was a non-optional fee which had been excluded from the ad, and because the ad did not make clear that it was excluded or how the charge was calculated, we concluded that it breached the Code.
On that point, the ad breached CAP Code (Edition 12) rules 3.18 and 3.19 (Prices).
Action
The ad must not appear again in the form complained of. We told Pegasus Homes Ltd to ensure that their future promotions communicated all applicable significant conditions or information, including a prominent closing date, where the omission of such information was likely to mislead consumers. We also told them to ensure future promotions did not misleadingly omit information regarding the price for the service charge.
CAP Code (Edition 12)
8.17 8.17.1 8.17.4 8.17.4a 3.18 3.19
