News

At Total Landlord Insurance we constantly strive to have our fingers on the pulse within the landlord insurance marketplace, reporting on news stories and developments from the world of buy to let cover.

Total Landlord Insurance provides this information without any liability as to its use.

Hammer comes down on confusing property auctions

30 July 2014

Property auction firmsProperty auction firms list misleading reserve and guide prices on their web sites that are too confusing for bidders, the Advertising Standards Authority (ASA) has ruled.

Upholding a complaint against web site Auction House UK, the ASA decided that industry practises need tightening up.

Auction House UK was ordered to:

• Clearly display accurate guide prices
• Explain how the guide price was calculated
• Tell prospective bidders that reserve and guide prices were subject to change at short notice
• Explain how differences between guide and reserve prices impact the auction sale price of a property

Although the ruling is only binding on Auction House UK, a precedent for other auction houses to follow the decision was set when a letting agency was found to be misleading tenants about the cost of renting a home.

Subsequently, all letting agents changed their web sites and marketing materials to reflect the ASA ruling. The same is expected to happen with auction houses.

“We told them to ensure, unless they routinely updated their guide price where a reserve was subsequently set that was higher than the lower bound indicated by the guide price, that the text clearly positioned the guide price as an indication of the range within which, or, in the case of single-figure guide prices, within 10% of which, the minimum acceptable sale price would fall, so as to make clear that the property might not be purchasable at the lowest figure stated,” said the ASA ruling.

Auction House UK argued their web site was updated by franchisees and followed industry guidelines.

“Guide prices for auctions were set at the beginning of the marketing period, a reserve price, which is the lowest price at which the auctioneer was authorised to sell the property during the auction itself, could be agreed much later,” the firm told the ASA.

“The policy operated by their franchisees was to set reserve prices just before the auction day, which ensured that the reserve could properly reflect levels of buyer interest as well as seller requirements.

“They stated that after the auction, the auctioneer, with the agreement of the seller, was able to sell at a lower figure a property that had not reached its reserve price, which might match or even fall below the quoted guide price.”