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UK Land Investments set to work with MPs to drive out Land Banking Scams from the industry
UK Land Investments has teamed up with MPs who share their growing concern over the practice of a number of companies in the land banking industry who are deliberately misleading investors on the potential returns they can make from investing in speculative land investments.
In a Westminster debate held on 12th July, Greg Mulholland, MP for Leeds North West, cited an example in his own constituency.
‘One company selling land in my own constituency explicitly claimed to investors, in private, that the local council would award permission for development. This claim is clearly outrageous given the advice that we have had from the Council and the Government; it is incorrect and misleading. It is not an isolated case. I have been inundated with correspondence from people up and down the country.’
Mulholland continued ‘There is a strong coalition working on this matter. I am working with the CPRE and with several MPs from all parts of the house. I have also been contacted by reputable land investment companies, including possibly the largest such company in the United Kingdom, UK Land Investments Group.
‘UK Land Investments are increasingly concerned because they invest large sums of money to ensure that land is bought and sold legally and without misrepresentation – they wish to see fly-by-night organisations brought to book for their scandalous practices and the damage they do to this industry.
‘I am delighted to be working with such organisations and we have developed some proposals to set-up a self regulating body to monitor the actions of land investment firms to ensure that they are not engaging in the kind of practices that I have mentioned.’
Brian Smith, Director of Strategic Land Buying at UK Land Investments commented; ‘We are absolutely delighted that we will be working closely with Mr Mulholland on his campaign to expose poor business practices and mis-selling and fully support the setting up of an Independent Regulatory Organisation to ensure that other companies meet the exacting standards that we work to.
‘We have been increasingly concerned by the damage disreputable companies are doing to our industry.
‘It has come to our attention that there are businesses that are advertising plots of land for less than £10,000 with promises or guarantees of obtaining planning permission within a couple of years and a return on your investment of 1000% or more – this offer sounds too good to be true because frankly, it is.
‘Clearly plots of land being offered for £10,000 or less with a promise of planning consent in a couple of years is nonsense – they offer land at this price because typically it is cheap land without any real planning prospects.’
‘As a responsible business we are very concerned at the behaviour of these so called businesses because they are clearly intent on misleading customers to part with their hard-earned cash and we would urge anyone who is interested in land to carry out the following checks before the decide on whether to invest:
1. Check with the Land Registry that the land is actually owned by the company you are buying from, or ask them to show you the contract of sale that the site has been purchased because it can take several weeks for land to be registered in a new owners name.
2. Ask to meet their land buying and planning team – and if planning permission is promised ask them to demonstrate how they can promise this and insist that they show you the research they have already undertaken to back-up their claims.
Each site is unique and the specific planning issues can therefore vary considerably. However, it is always important for any company to demonstrate to your satisfaction that there is likely to be a requirement to identify further sites within the district for development, what constraint policies (such as Green Belt, conservation areas, wildlife sites, etc.) apply to the site and whether these can be overcome / amended and whether it is a sustainable location in terms of its proximity to existing development services and public transport. There is no such thing as a perfect site that satisfies all criteria but it is important to see evidence demonstrating that the relevant issues have been considered in concluding the site has real potential.
3. Ask to see their audited accounts to make sure they have enough funds to pay for planning – UK Land Investments retain up to one third of each site for itself and reserves £500,000 per site to promote its own land for potential re-zoning or allocation for residential development - you should be comfortable that the company you are dealing with has sufficient reserves to meet their obligations to you.
4. Ask to be taken to the site and ask their agent to talk you through why it is such a good site – if it is not next to current residential development then be very suspicious.
Smith concluded, ‘we know from my own team of expert land buyers and planners that buying land can be an excellent, medium term investment with returns of up to 400% on land that is re-zoned for residential development - but we urge anyone looking at other businesses and considering land investment opportunities to be wary of any promises regarding planning permission.’
For more information on Land Banking and issues surrounding the industry and the need to build more housing please contact Claire Hardesty from UK Land Investments on 020 7492 4040, or Greg Mulholland MP at the address below.
Greg Mulholland MP
House of Commons
020 7219 3833
About the Author: Leading Land Investments Group