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19-11-2009

ComCom chasing bigger fish after dodgy Invercargill property scheme

Landlords.co.nz

The Commerce Commission is chasing bigger fish in Auckland after it successfully prosecuted CMA Property Investments over its role in a property scheme in Invercargill which mislead people into believing they were buying their own homes.

By Paul McBeth

The regulator said it is pursuing civil and criminal cases against Haven Property Group and The Home Finance Co for operating similar schemes. A spokesperson said these are "much bigger than the Invercargill case".

CMA has been fined $40,000 and was ordered to pay $42,290 in reparation to occupiers of properties in the scheme by the Invercargill District Court, according to a statement by the commission. The company was convicted of not making clear to its customers that they would not secure the legal title of a property until all money had been paid at the end of a 30-year period.

The scheme was aimed at renters in Invercargill who would not normally be able to secure a mortgage through a standard lender, and bound them into a 30-year agreement where the customers made weekly payments to cover the principal, interest, rates, taxes and insurance, as well as covering any repairs to the property.

"The occupiers did not believe that they were getting involved in a ‘rent to buy' scheme - they thought that the agreements that they entered into gave them all the normal rights associated with buying a house," Adrian Sparrow, Commerce Commission Director of Fair Trading, said.

"It is also important that those involved in property investment scheme ensure that all marketing and promotion of the schemes is accurate and all relevant information is disclosed to potential participants."

The property investment company headed by Chris Ashenden, who is also a director of The Home Finance Co, joins Sothern Housing Group, Newfoundland and Invercargill Property Management in breaching the Fair Trading Act. The other three companies pleaded guilty in August.

Source: Landlords.co.nz

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