Rent-to-buy schemes have again come under the spotlight after the regulator scored a legal victory over a company that promoted the sale method.
Presto Property Solutions and its director, Rowan Amanda Lines, admitted in the Supreme Court to making “false and misleading representations” to three prospective buyers, according to Consumer Protection WA.
The regulator said these representations related to statements made by Ms Lines that she was the owner of the properties and that no bank loan would be required to buy them.
“For some time after July 2010, the company and its director had placed advertisements in Quokka and on Gumtree, making claims such as ‘I buy houses fast’ and ‘No banks’,” Consumer Protection said.
Rent-to-buy schemes allow purchasers to bypass lenders by making mortgage-style repayments directly to the vendor.
Consumer Affairs Victoria recently brought a case against a fake agent linked to a different rent-to-buy firm, Ezibuyhomes.
Three groups of consumers who signed up for Presto Property’s rent-to-buy schemes will receive a total of $70,000 compensation as settlement of legal action taken by Consumer Protection WA.
Presto Property and Ms Lines have entered into a court-enforceable undertaking, valid for two years, which prevents them from telling potential vendors that they purchase the properties and acquire the freehold title to the properties when they do not.
They are also banned from telling potential buyers that they can purchase the property without a bank loan, unless there are reasonable grounds to make that claim.
Acting commissioner for consumer protection Gary Newcombe said the regulator’s legal actions should send a clear message to the rent-to-buy industry about exploiting buyers.
“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.
“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.”