Quantum Housing to pay $700,000 in penalties for misleading property owners

The Federal Court has ordered Quantum Housing Group Pty Ltd to pay $700,000 in penalties for making false or misleading representations relating to the National Rental Affordability Scheme (NRAS).

Between February 2017 and July 2018, Quantum sent a series of misleading letters and emails to at least 450 investors who had rental dwellings participating in the NRAS scheme, and pressured them to terminate their arrangements with their existing property managers and instead use property managers approved or recommended by Quantum.

Quantum failed to tell investors that it had commercial links with the property managers it recommended.

Quantum also told some investors that their existing property manager had not properly managed their property’s compliance with the NRAS, when this was not true.

“This conduct was blatant, planned and deliberate in an effort to trick investors into switching from their preferred property managers,” ACCC Chair Rod Sims said.

Quantum admitted that it falsely represented that property managers must meet accreditation guidelines issued by Quantum, and that investors who failed to appoint an approved property manager were in default of their agreement with Quantum and risked losing their NRAS incentives.

The Court also ordered Quantum’s director, Cheryl Howe to pay $50,000 in penalties for being knowingly concerned in Quantum’s breaches of the Australian Consumer Law. Ms Howe was also disqualified from managing a corporation for three years.

“The penalties ordered against Quantum and Ms Howe serve as a warning that making false or misleading statements will result in serious consequences not just for the company involved but also any executive or employee found to be knowingly concerned in the conduct,” Mr Sims said.

Quantum and Ms Howe admitted liability and made joint submissions to the Federal Court with the ACCC.

The ACCC had also alleged that the conduct engaged in by Quantum was unconscionable conduct. However, the Court found the admitted conduct did not depend on exploiting vulnerability on the part of investors, and in those circumstances was not satisfied that the conduct was unconscionable.

Background

The NRAS is an Australian Government affordable housing initiative, delivered in partnership with state and territory governments. The NRAS offers financial incentives to people who rent dwellings to eligible low and moderate-income households at a rate that is at least 20 per cent below the market rate. The incentive is a contribution by the Commonwealth and the relevant State Government for each NRAS property in each year.

As an approved participant of the scheme, Quantum was entitled to receive incentives under the NRAS and was responsible for ensuring NRAS dwellings were compliant with the scheme.

Quantum ceased trading in December 2019 and is in liquidation.

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