Land investment 'scams' warning

2011-03-05 08:06:47

5 March 2011 Last updated at 00:00 Share this page Delicious Digg Facebook reddit StumbleUpon Twitter Email Print Land investment 'scams' warning By Bob Howard Reporter, Money Box William McNaught paid £100,000 for eight strips of land Continue reading the main story Related Stories MP demands end to 'landbanking' CPRE wants 'land banking' regulation

More and more people are being targeted by firms cold-calling them to buy land they say is ripe for development, the BBC has learnt.

Many are persuaded to pay tens of thousands of pounds for land which is unlikely ever to be built on.

The Financial Services Authority (FSA) said it was investigating about 20 such schemes.

The City of London Police's Economic Crime Directorate said what it had seen so far was the tip of the iceberg.

Pressure selling

William McNaught, from Yorkshire, was contacted by The Property Partnership three years ago and persuaded to pay £101,000 in order to buy eight strips of land in different locations around the UK.

He said he was convinced by the high returns which were promised.

"They were so convincing. The broker told me the investment would achieve a profit of 100-130% in a period of 12 to 18 months," he said.

Continue reading the main story “Start Quote

The broker told me the investment would achieve a profit of 100-130%”

End Quote William McNaught, Land investor

Radio 4's Money Box has investigated a strip of land Mr McNaught bought near Towcester in Northamptonshire for £10,000 in September 2009.

Instead of being close to development, the land is within the boundaries of the historic Easton Neston Estate and the local council has served further restrictions which mean not even fences or agricultural sheds can be erected.

Planning restrictions

John Townsend, the councillor responsible for planning at South Northamptonshire District Council, said the area was protected to prevent any sort of development.

"It is in open countryside, it is in a conservation area, there are endless reasons why I think it would very unlikely that planning permission would ever be given," he said.

"Nothing can be put here, they cannot put up any fencing, they cannot put up any sheds or huts."

Estate Agent Craig Bees believes Mr McNaught's strips may only be worth as little as £75

Craig Bees, a director of the local estate agency Bartram and Company, was asked by Money Box to try and value one of Mr McNaught's strips of land. He believes it is worth a fraction of what he paid for it.

"I would describe it as a postage stamp in the middle of a park. It has no access to it and it is too small to build anything meaningful on," he said.

"It has very little or no planning potential. The plot is worth in the order of £75."

Mr McNaught admitted he did not make local enquiries before agreeing to buy the land, something he now bitterly regretted.

"I have been foolish and I am now paying the penalty for that foolishness," he said.

The Property Partnership is a trading name for the firm Ultraclass Limited. Money Box asked The Property Partnership to comment on the land it has sold to Mr McNaught but it has not responded.

Regulatory action

The City of London Police's Economic Crime Directorate said Mr McNaught was not alone in having been tricked into handing over large sums in order to buy land which had minimal value.

Detective Chief Inspector David Clarke said this was a growing problem.

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