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Retired man loses £85,000 in ‘landbanking’ scam – 23/02/2011
The Trading Standards Service (TSS) is warning consumers to be on their guard after a retired man lost £85,000 in a land investment scam.
The warning comes during Scams Awareness Month, when TSS revealed that Northern Ireland consumers lose over £100million every year on bogus lotteries, prize draws, and other scams.
Landbanking is the practice of purchasing land with the intent to sell it on to others for more than was initially paid.
The consumer was cold-called by a landbanking scheme promoter and offered the chance to purchase plots of land for up to £25,000 in south east England.
The promoter gave a slick sales pitch, explaining that by buying a small plot of agricultural land near a town or city where house prices are high, the consumer could make a hefty profit by gaining planning permission for the land and then selling it to a housing developer.
The scammer went on to explain that planning permission for the plots was virtually ‘guaranteed’ and that investment in land would prove to be more lucrative than shares in the current economic climate.
Even though the consumer told the scammer he wasn’t interested and ended the call, he was cold-called again two days later by a different promoter, who successfully convinced the consumer to change his mind.
The retired man bought and paid for four plots of land and patiently waited to hear if his investment had paid dividends. After a number of weeks, he tried to contact the promoters for an update but the phone lines had gone dead and their website had disappeared. Sadly, the scam victim has lost his life savings of £85,000.
Explaining the scam, Damien Doherty, Area Inspector for Trading Standards said: “Some unscrupulous sellers have made millions of pounds by duping investors into buying unsuitable plots land at vastly inflated prices in the belief that the land has residential development potential.
“In reality the land may be totally unsuitable for residential development and have little hope of ever getting planning permission. There have been examples where the land offered for sale was located in an area of outstanding natural beauty, a site of special scientific interest or on geographically unsuitable ground. Often the land ends up abandoned and neglected.”
Mr Doherty continued: “Landbanking operators aren’t looking to make you rich, only themselves. Don’t fall for their dubious claims. The best way to defeat landbanking scammers is to challenge everything, do your homework and be prepared to say ‘no’ if it looks too good to be true.
“This is just another example of how con men can destroy people’s lives. New scams appear every week and they are becoming so increasingly sophisticated that anyone can fall for them.”
To help protect yourself TSS is encouraging people to remember the following tips, if you are contacted by a landbanking promoter:
· Question any claims that your investment will make money.
· Investigate the company carefully.
· Take independent professional advice about the status of the land and its future development potential.
· Ask the local authority how likely it is that planning permission will be granted.
· Some landbanking schemes may be considered in law as ‘collective investment schemes’ and so may need to be authorised by the Financial Services Authority.
Contact the FSA consumer helpline on 0845 606 1234 for advice, or read FSA advice about landbanking on their website.
Consumers who believe they have been the victim of a scam should contact Domain Scams on 0300 123 6262 or alternatively report it on the Domain Scamswebsite.
For more information on scams and how to avoid them, visit the nidirect website.