Tenants have been warned by the Office
of Fair Trading to watch out for Right to Buy mortgage scams.
The trading watchdog has recently acted
against two companies which, in a bid to obtain business, gave the
impression that the Governments Right to Buy discount scheme
for council or housing association tenants was likely to end at any
A Birmingham company, issued leaflets in the city at the end of last year claiming
that discounts on properties would stop at the end of 1999. The leaflets
asked: "can you afford to lose up to £20,000?" and
encouraged tenants to request a quotation on a mortgage.
The statement in the leaflet was false
the Government has no plans to end the Right to Buy scheme.
The OFT obtained written assurances from the company that it would
not publish such misleading advertisements again.
Another company in Coalville, Leicestershire,
gave similar written assurances to the OFT last month after the watchdog
was alerted to an advertisement in a Bridgend newspaper which stated
"the Government may remove your right to buy at any time".
John Bridgeman, Director General of Fair
"We were able to contact these companies
and stop them from using misleading advertisements to gain business.
Unfortunately they are not the only companies operating this or similar
scams involving the Right to Buy scheme. Tenants should be aware that
the Right to Buy scheme is not ending and that they should ignore
any attempts to push them into long-term financial commitments."
"If they see any similar advertisements
they should be reported to the local trading standards authority.
Anyone who has already entered into a mortgage as a result of misrepresentation
should contact a local Citizens Advice Bureau or legal advice centre."
Housing Minister Nick Raynsford said:
"We provide support for home ownership
and offer several schemes to help people buy, including the Right
to Buy with around 40,000 sales a year. We have made it clear that
the Right to Buy will continue, with tenants entitled to generous
discounts currently worth up to £38,000."
"People who say that the scheme is
about to end are deceiving tenants and, if their aim is to make money
out of them, I have nothing but contempt for their activities. Buying
ones home is probably the biggest investment of a lifetime.
People should consider this carefully, and do it if it is right for
them, not just to line someone elses pockets."
What you can do about it:
Take a copy of any advertisement to your
local trading standards authority.
If you have already been persuaded to take out a mortgage on the strength
of misleading claims, then you should get legal advice as soon as
possible you may have a claim against the company.
What the law says:
- Control of Misleading Advertisement Regulations: if the OFT
receives a complaint about misleading advertising, it can seek
a High Court injunction unless the advertiser gives a satisfactory
undertaking to stop using it. This power can be used against any
kind of deceptive promotional statement or material provided it
is likely to affect peoples economic behaviour. Normally
the ASA - the advertising industrys own watchdog
or local authorities deal with advertising complaints. But where
they have any difficulties, or if urgent action is needed, the
OFT can go straight to court.
- Trade Descriptions Law: traders who make false statements about
goods or services in the course of business can be prosecuted
by local trading standards authorities under the Trade Descriptions
Act and prices legislation.
- Contract law: a person who is induced to enter a contract by
misrepresentation can seek to have it set aside and, unless the
misrepresentation was an innocent mistake, may be entitled to
Right to Buy
This scheme, introduced in 1980, gives
people who have been secure tenants of council or other public sector
landlords for at least two years the right to buy their homes at a
discount. The discount varies on the type of property, its location,
its value and the length of tenancy.
Tenants considering Right to Buy should
ask their landlord for a copy of the booklet "Your Right to Buy
Your Home" which takes them through all steps of the process.
They do not need to appoint a third party to apply for a mortgage
or to apply for and complete the Right to Buy application form. Tenants
can do both themselves.
Confidential advice and practical help on
Right to Buy and making an application is available without obligation
from one of our case advisors.