Estate agent made false sales claims

A leading estate agency has been found guilty of being economical with the truth over its sales figures.

Foxtons was forced to withdraw claims that it sold or rented a quarter of all its properties within a 7.5-mile radius of Mayfair after rival Winkworth complained to the Advertising Standards Authority about the accuracy of the statements.

The ASA upheld the complaint, ruled it was misleading and has ordered Foxtons not to repeat the claim in its literature.

Foxtons' claims that it sold £2.5 billion-worth of property a year and one in four properties in inner London were based on its own unscientific "competitor analysis" and on "sales subject to contract".

But about one in three "sales subject to contract" failed to complete for various reasons and were, therefore, not sales.

Foxtons' in-house lawyer, Karl Daly, said: "Foxtons worked closely with the ASA in respect of the complaints and appreciated that the fact that its figures related to 'under offer' stock might have caused some confusion to the general public and, therefore, voluntarily agreed to change the wording. Foxtons apologises if its claims were in any way misleading."

The company was also forced to admit a quote praising Foxtons - purportedly from the documentaries and investigations department of the BBC - had been written by the company itself.

Foxtons claimed the quote had been "verbally approved" by someone at the BBC and the corporation had not said it objected to the use of its name.

However, the ASA said its code of practice required that such "testimonials" could only be used with "signed and dated proof that permission was granted". Foxtons failed to do this with the BBC and with other named individuals.

In total, three complaints made to the ASA by Winkworth were upheld.

Meanwhile, Britain's housing boom and soaring mortgage levels have led to it being placed on a special international "credit risk" list.

The UK has been listed for the first time as a country facing potential stress in its banking system, because of worries that homebuyers could default en masse on debt repayments.

Standard and Poor's rating agency has warned that the debt burden of UK mortgage-holders - even with current rock-bottom interest rates - is beginning to reach "uncomfortably high levels".

It believes the risk of defaults is particularly high in the London area, according to today's Financial Times.

S&P puts the UK on a list of six other countries - including Ireland and the US - where finance houses face a twin threat from declining revenues and increasing bad debt.

Yesterday members of the Bank of England's monetary policy committee told the House of Lords that the risks would grow as long as the housing boom continued.

Marian Bell, an external member, said: "As the debt builds up and the growth in house prices continues, the risk of an adjustment in the future becomes more of a concern."

The permanent secretary to the Treasury, Gus O'Donell, also told MPs that the rise in house prices was "unsustainable".

S&P said the UK's level of mortgage debt exceeded 60 per cent of the country's Gross Domestic Product.

Its report added: "In the past, borrowers benefited from inflation, which eroded the real value of nominal debt.

"With lower inflation, the real burden of debt is sustained much longer."