The compensation will go to three groups of consumers who agreed to take part in rent-to-buy property deals promoted by Presto Property Solutions Pty Ltd and its Director Ms Rowan Amanda Lines. The company and Ms Lines admitted making false and misleading representations to the three prospective buyers/tenants, in breach of the Australian Consumer Law, relating to statements made by Ms Lines that she was the owner of the properties and that no bank loan would be required to purchase the properties.
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”. Ms Lines had also placed signs with similar slogans on light poles in Perth’s northern suburbs.
Presto Property Solutions and Ms Lines have entered into a court-enforceable undertaking, valid for two years, which prevents them from:
- Representing to potential vendors that she or the company actually purchased the properties and acquired the freehold title to the properties when they do not;
- Representing to potential buyers that she or the company owns the property, unless they are in fact the owner of the freehold title of the property; and
- Representing to potential buyers that they can purchase the property without a bank loan, unless there are reasonable grounds to make that claim.
Rent-to-buy schemes are targeted at people who don’t qualify for a home loan through traditional means. Buyers enter into a contract whereby they agree to pay rent to the seller in return for being able to purchase the property at a later date. It usually involves paying a substantial deposit as well as an additional regular payment above the rent, which is intended to go towards the eventual purchase of the property.
Acting Commissioner for Consumer Protection Gary Newcombe said this was a good outcome for the consumers who claimed they were misled when they signed up to the deal.
“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,” Mr Newcombe said.