The Western Australian scheme was conducted by Patricia and Bryan Susilo, who on 27 February 2014 admitted to their misleading and deceptive conduct.
Ms Susilo further admitted to operating as a real estate agent without a licence.
Between late 2010 and early 2013, Consumer Protection alleged that deceptive statements from the company were used to lure unwary investors.
Such statements included: “Own my home”, which gives the impression the prospective buyer in these schemes would get either sole or joint ownership of the homes after signing the contract, which was not the case; “No banks needed” and “Stuff the banks – move in today”, which Consumer Protection claimed suggests buyers could purchase the home without a bank loan, when the promoters had no reasonable grounds to make these statements; “We do not charge commission or fees”, which was misleading since the promoters derived revenue from the arrangement; and “We are part of a group of real estate investors”, which was false.
In addition, figures related to the weekly cost to prospective buyers did not accurately reflect the true total cost required to eventually own the property.
Commissioner for Consumer Protection Anne Driscoll said this case highlighted the dangers of people getting involved in these complex arrangements.
“It would appear from our investigations into these rent-to-buy property schemes that the prospective buyers are at great risk of losing their money and sellers are locked into a fixed sale price for the duration of the contract,” Ms Driscoll said.
“The schemes target people who are desperate and find it difficult to get finance to purchase a home, as well as vendors who are having difficulty selling their homes.
“Those who may be contemplating taking part in these schemes should think very carefully and get expert financial and legal advice before signing any contracts. They should treat any claims being made by promoters with scepticism and check to make sure information being provided by the promoter is accurate.”
Ms Driscoll warned other promoters of these types of schemes currently operating without a licence that they too could face prosecution and similar penalties.