The Advertising Standards Authority (ASA) has ruled that a Pegasus Home’s advert for retirement properties was misleading and featured terms and conditions that were hard to understand.
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.
The advert, which appeared in a national newspaper, included text that stated, “Try before you buy with Pegasus Rent-to-Buy Experience the joy of a new Pegasus later living home, without the wait”.
A national newspaper ad published on 27 April 2024 for Pegasus Homes, a retirement property company, included text that stated, “Try before you buy with Pegasus Rent-to-Buy Experience the joy of a new Pegasus later living home, without the wait”.
Further text stated, “Once you’re ready Purchase within 12 months and get 9 months [sic] rent back* or Receive 5% off the asking price”. Small text at the bottom of the ad stated, “Terms and Conditions apply. Offers are available on selected apartments only. *The rent-to-buy tenancy must start by 30th June 2024 and your rental cashback will be refunded on purchase completion […]”.
The ASA challenged whether the conditions of the promotion had been made sufficiently clear.
Pegasus Homes Ltd said the ‘Rent to Buy’ scheme gave customers the opportunity to try living in one of their communities before deciding whether to purchase the property. If, at the end of the 12 months of renting the property, they decided to purchase the property, there was a financial benefit whereby they received nine months’ rental value off the purchase price. If they did not want to proceed at the end of the 12 months, they could give one month’s notice to vacate the property and development without any contractual obligation to purchase the property.
The ad included a qualification that stated, “Terms and conditions apply. Offers are available on selected apartments only. The rent to buy tenancy must start by 30th June 2024 and your rental cashback will be provided on purchase completion. 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.”
Pegasus Homes further argued that the closing date was clearly stated, and they believed the qualification was sufficient in communicating applicable conditions and restrictions. 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.
But the complaint was upheld be ASA.
Here is ASA’s assessment:
‘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 “Once you’re ready Purchase within 12 months and get 9 months [sic] rent back* or Receive 5% off the asking price” to mean that if they rented a Pegasus Homes property for up to 12 months and bought that property within that time, they could either receive a refund of nine months’ rent or a 5% discount against the asking price of the property.
‘The ASA understood that to be eligible to receive a refund of nine months’ rent, consumers had to have started their rental tenancy by 30 June 2024.
‘We acknowledged that the ad stated, “The rent-to-buy tenancy must start by 30th June 2024”. However, we considered that this wording appeared in very small text in the bottom right-hand corner 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 start the rental tenancy 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 alongside the claim that related to receiving nine months’ rent back, and not the claim about receiving 5% off the asking price, which came after it, it was therefore ambiguous as to whether the terms and conditions, including the closing date, specified in the small text applied to the latter part of the promotion.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 the rent refund, consumers had to instruct a solicitor (from Pegasus Homes’ approved panel) before month nine of their rental tenancy, have completed on the sale of the property by month 12, and put down a 10% deposit at exchange of contract. We considered those were significant conditions which were 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 promotion breached the Code.The ad breached CAP Code (Edition 12) rules 8.17, 8.17.1, 8.17.4 and 8.17.4.a (Promotional marketing).’
Action: ASA says 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.
