The compensation is the result of Rowan Amanda Lines, director of Presto Property Solutions, reaching a settlement with WA’s Consumer Protection office in relation to advertisements made regarding a rent-to-buy scheme.
Rent-to-buy schemes are targeted at people who don’t qualify for a home loan through traditional means.
Buyers enter into a contract whereby they agree to pay rent to the seller in return for being able to purchase the property at a later date.
The schemes usually involve paying a substantial deposit as well as an additional regular payment above the rent which is intended to go towards the eventual purchase of the property.
According to Consumer Protection, Lines made the false claims to three prospective buyers in 2010, leading them to believe that she was the owner of the properties at the centre of the scheme when she was not and that she could help them buy the houses without the need for a loan.
As director of Presto Property Solutions, Lines also distributed false advertisements online and throughout suburbs in Perth that made claims such as “I buy houses fast” and “No banks.”
As well as having to provide the $70,000 in compensation to the three prospective buyers, Lines and Presto Property Solutions entered into an enforceable undertaking with Consumer Protection which prevents them from representing to potential vendors that she or the company actually purchase the properties and acquire the freehold title to the properties when they do not, representing to potential buyers that she or the company own the property, unless they are in fact the owner of the freehold title of the property, representing to potential buyers that they can purchase the property without a bank loan, unless there are reasonable grounds to make that claim.
Consumer Protection acting commissioner Gary Newcombe said the case highlighted the need for consumers to exercise caution when entering schemes such as rent-to-buy.
“We urge consumers to exercise a high degree of caution before entering into a rent-to-buy arrangement, as buyers who default on their tenancy agreement or can’t get finance to buy the property at the end of the option period are at risk of losing the deposit they paid and the money that was intended to go towards the purchase of the property,” Newcombe said.
“Consumer Protection has taken numerous actions against property promoters who have made misleading statements and engaged in deceptive conduct in order to attract people who are often desperate to sell or buy property,” he said.
“Our actions against promoters of rent-to-buy schemes and the Court outcomes that we have achieved should send a clear message to the industry that they need to act fairly with consumers or face the consequences.”
