WA’s consumer protection takes legal against rent-to-buy property scheme after tenant sells portable swimming pool

The WA government’s department of Consumer Protection has lodged a Supreme Court writ against the promoter of a rent-to-buy property scheme, alleging the company and its director misled consumers.

In its legal action against Presto Property Solutions Pty Ltd and director Rowan Amanda Lines, it alleges that a couple from Quinns Rock, who signed up as vendors under Presto’s rent-to-buy scheme returned from overseas almost a year later to discover the tenant/prospective buyer had sold their above-ground swimming pool, valued at more than $16,000.

It is also alleged that Lines purported to be the owner of the home when dealing with the tenant/prospective buyer, but at no stage did she own the property - she had only signed an option to purchase it.

The couple from the outer north suburb of Perth had dealt with Lines after they responded to a sign posted by Presto on a light pole with the slogan "we sell houses fast" near their home in July 2010

It is the third rent-to-buy scheme which has been the subject of recent legal action by Consumer Protection.

Rent-to-buy schemes are targeted at people who don’t qualify for home loans. Buyers agree to pay rent to the seller in return for being able to purchase the property at a later date.

The commissioner for Consumer Protection is seeking injunctions against Presto Property Solutions Pty Ltd and director Rowan Amanda Lines restraining them from making false representations to both buyers and sellers involved in their scheme, in breach of the Australian Consumer Law.

“Ms Lines had later purported to be the owner of the home when dealing with the tenant/prospective buyer. At no stage did Ms Lines own the property, she had only signed an option to purchase it.

“The commissioner further alleges that Ms Lines and her company made similar false statements such as “no banks, rent and own” and “I buy houses fast” in a series of advertisements in the Quokka newspaper and Gumtree website,” said Consumer Protection.

Acting commissioner for Consumer Protection Gary Newcombe has urged consumers considering a rent-to-buy scheme to be extremely cautious.

“In this case, the Quinns Rock couple returned from overseas almost a year later to discover the tenant/prospective buyer had sold their above-ground swimming pool which had a replacement value of more than $16,000,” Newcombe said.

“This highlights the confusing nature of these agreements where the line between tenant and owner is blurred and the legal rights of all parties are unclear. There are many other risks that we are concerned about.

“Under these schemes, 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 money that was intended to go towards the purchase.

“We are also concerned that money paid by the buyer does not appear to go into a trust account and there is very little accountability of where the funds go or any system in place to keep track of the ongoing option payments.”

In October 2012, the Commissioner for Consumer Protection lodged a Supreme Court Writ seeking an injunction against another rent to buy property scheme, alleging that promoters Patricia Mirawati Susilo and Bryan Artawijaya Susilo of Applecross, engaged in misleading and deceptive conduct in breach of the Australian Consumer Law.

In August 2011, the Commissioner warned consumers about rent to buy property promoters No Loan Home Pty Ltd (trading as Perth’s Easyhomes WA), its sole Director Filip (Fil) Butkovic and employee Nikola (Nik) Butkovic.

In May 2012, the Supreme Court ruled the scheme was illegal because the promoters were not licensed real estate agents. The Court also ruled that the promoters had misled clients regarding the future value of the property, the potential equity that they are able to build up over a four to five year period and their ability to obtain finance at the end of this period.

Consumers who have concerns about a rent-to-buy property scheme should contact Consumer Protection on 1300 30 40 54 or email: consumer@commerce.wa.gov.au for further information and advice.