Brits Losing Millions To Land-Bank Fraud

Roddy Mansfield, Sky News Investigations
Brits Losing Millions To Land-Bank Fraud

A Sky News investigation has uncovered evidence that increasing numbers of UK investors are falling victim to land-bank fraud.

Figures released by the Insolvency Service reveal 67 land-bank companies have been forced into liquidation since 2009 which collectively lost investors £50m.

In total, land-bank schemes are estimated to have lost UK investors £250m and complaints to the Insolvency Service have increased 33% since 2007.

Sky News confronted Asset Land Investment (ALI) , a company involved in a land bank scheme.

The company markets plots of land to the public - land it says is about to receive planning permission to build homes, yielding huge profits for the investor.

But the land is often in green belt areas that have little chance of being developed and investors can be left with plots they cannot sell.

Claire McKendree-Wright from Tunbridge Wells was persuaded by ALI brokers to put her life savings into two parcels of land in Newbury and a further two in Harrogate .

A single mother with five children, Ms McKendree-Wright paid £63,760 for the plots.

She claims she was told her investment would increase three-fold in 18 months.

She said: "They sounded so plausible. They told me they do all the background work for their customers and they only sell plots that are going to be snapped-up for building.

"I was left to feel there wasn't a shadow of a doubt the plots would get planning permission and that I couldn't lose my investment because it was like putting my money in the bank."

Ms McKendree-Wright says she was told that she could come out of her 'investment' at any time simply by notifying her ALI broker.

But when her personal circumstances changed and she asked to come out of her investment, she says Asset Land Investment refused to return her money.

She said: "I was out of work and couldn't get a mortgage and I desperately needed a deposit to rent somewhere for me and my children.

"But Asset Land said they couldn't buy back my land once it's been sold, they can only re-sell the plots to someone else and only then one plot at a time."

Posing as potential investors, we approached Asset Land Investment and were offered a 990 sq ft plot in a field near Harrogate, North Yorkshire for £17,820.

The firm's senior broker, Jennifer McKenna, insisted our plot was on the verge of receiving planning permission and our investment would triple in value.

She said: "When you ask me, 'is it definitely going to get planning permission?' the answer is a categoric 'yes'. You just sit on it for 18 months then sell it on to a developer.

"Once it has got right-to-build status on it you can expect to see a three-fold return. So if you put in £10,000 you can expect to see in the region of £30,000."

But a check with Harrogate Council confirmed there are no plans to allocate the land for housing.

The council told Sky News: "The site is outside the Harrogate district development limits and furthermore, the site is located in the green belt.

"There is thus strict control over new developments in this area. New housing would, as a matter of principle, be contrary to national and local planning policies protecting Green Belt."

Harrogate Council said the earliest the land could be considered for open-market housing development was 2024.

Asset Land Investment purchased the field for £115,000 and divided it into 200 plots. So far they have sold about a quarter of these to investors for a total of £761,038.

In a secretly-filmed meeting with the company's president, Stuart Cohen, we were also told our money was safe as we could come out of our 'investment' at any time:

Reporter: "So I wouldn't lose any money if I wanted to come out of my investment?"

Cohen: "Not at all, no. If you wanted to come out of it instantly, if you said to me, pay £20k tomorrow, you would only get back what you paid for it."

Asset Land Investment claim on their website that, because they are selling parcels of land to individuals and are not collectively investing their money, they do not come within the remit of the Financial Services Authority (FSA) .

The company has also applied for the land at Harrogate to be considered a rural exception, which would allow it to be considered for development of affordable housing under the Government's rural exception site policy.

The FSA is warning the public to be wary of companies who cold-call them selling land.

Spokesperson Jonathan Phelan told Sky: "They sound just like proper investment advisors, so don't think you'll be able to spot one when they call.

"Their classic target victims are elderly because they're more trusting and more likely to have disposable cash.

"We've seen land sold in areas of special scientific interest and land sold on a slope so steep you would never be able to build on it.

"Yet the potential investor is told that it will get planning permission. This gives rise to an element of fraud which the FSA and the police take an interest in."

As well as Harrogate, Asset Land Investment is marketing sites in Newbury, Lutterworth, Steeple Morden and Stansted.

Stuart Cohen refused to answer our questions when we confronted him at an address in central London.

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