Agent’s advert which did not mention length of lease is cleared by watchdog

A leasehold property advertised on Rightmove drew a complaint that it was misleading because the length of the lease was not made clear.

The property in question had almost 102 years remaining on its lease.

The complaint was rejected by the Advertising Standards Authority – but the watchdog’s ruling strongly suggests that the length of shorter-life leases should be given in ads.

The ASA did not give a definite ruling as to when agents should refer to the length of the lease in their ads, but said that the “length of the lease was material information which a buyer would need to know when making a decision to purchase a property”.

It went on: “However, we considered that omitting that information from the ad would only be misleading if it was likely to affect a buyer’s decision to enquire further about the purchase of the property.”

The ASA cited lenders who might refuse a mortgage if the lease did not have at least 95 years remaining. It also mentioned the figure of 80 years and below, in terms of how much it would cost to renew a lease.

Chesterton Global had listed the property, saying: “Tenure: Leasehold.”

The Advertising Standards Authority received one complaint.

Chesterton told the ASA that the lease length of the property was 101 years and 11 months, and that would be communicated to anyone inquiring about the property.

They said that any member of the public reading their ad would generally know that all flats in England were leasehold rather than freehold, and would then have contacted their sales branch for more information.

The ASA did not uphold the complaint, because of the length of the lease in that particular case.

Its full ruling says: “The ASA understood that the number of years left on a lease could affect the opportunity to obtain a mortgage, and could also impact on any potential resale of a property.

“We understood that mortgage lenders often placed a limit on the number of years which could be left on a lease when offering a mortgage.

“We understood that, assuming a 25-year mortgage was being offered, the vast majority of lenders were likely to refuse a mortgage if the lease had somewhere between 50 and 75 years remaining.

“A small number might refuse mortgages if the lease did not have at least 80 or 95 years remaining.

“We also understood that extending a lease, especially one which had a short life, could be both costly and time-consuming.

“Once the number of years left on a lease dropped below 80, an additional premium applied when renewing the lease, referred to as the ‘marriage value’, which could significantly increase the cost of that renewal.

“We considered that the length of the lease was material information which a buyer would need to know when making a decision to purchase a property.

“However, we considered that omitting that information from the ad would only be misleading if it was likely to affect a buyer’s decision to enquire further about the purchase of the property.

“We considered that the number of years remaining on the lease in this case was sufficient to ensure that it would not affect a buyer’s ability to obtain a mortgage, and that the lease could be renewed without the potential extra cost of the marriage value.

“We therefore considered that omitting the length of the lease in this case was unlikely to affect a buyer’s decision to enquire further about the property. We concluded that the ad was not misleading.”

Chesterton and Humberts are part of the same group.

 

 

 

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3 Comments

  1. fpe

    Very woolly why can they just make the decision to show the length of the lease or not. The buyer has to take some responsibility to ask questions about their purchase!

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  2. johnclay

    I cannot believe that the ASA took this complaint seriously. Only 102 years left? Obviously a short lease should be declared, but what is a short lease? As a property lawyer (now retired, thank God) I am concerned that an acceptable length of lease is gradually increasing. 10 years ago almost all lenders would accept 20 to 30 years on top of the length of the mortgage term, ie 45 to 50 years in most cases. If the current trend continues we will need a new lease to be granted every time a property is sold! As if conveyancing on leasehold property is not complicated enough already.

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  3. Herb

    How many agents do not list the lease details inc maint/gr on their particulars?

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