Whilst there are lawyers around who will process these transactions the unscrupulous developers will seek them out. Even as this is being written there are UCIS`s being marketed and sold to unwary investors with the help of sales agents and UK law firms.
Coincidentally, all this was happening at the same time another equally creative scam was being touted to unwary investors.
Between 2005 and 2010 Countrywide Land Holdings unlawfully sold minute, worthless plots of land to UK investors with the promise of high-level gains from future Planning Permissions.
Land banking companies divide land into smaller plots, often only a single square foot, to sell to investors, with the expectation it will soar in value once it’s available for development. However, the land is often in areas of natural beauty or historical interest, with little chance of it being built on. Investors are told they will make money on small plots of land once planning permission is granted or development started. Permission is often not granted or even applied for, and investors are left with land that is practically worthless. It is often not made clear to investors that there are restrictions on the development of the land or that it is protected.
Countrywide Land Holdings netted c£33m in the process of selling small plots to unwary investors and the Financial Conduct Authority (FCA) have only been able to recover £2.5m to distribute amongst them. The scheme was deemed to have been an unregulated collective investment scheme.
The Land Banking scam was now upon us and would be repeated by many other so-called developers, many of which have been jailed. As a result, considerable losses have been recorded by investors in these schemes. Many British companies offering plots of land have failed or been shut down by the Financial Conduct Authority and directors of some of those companies were jailed.
In one instance a solicitor was one of eight men convicted of fraud, which to date has led to sentences totalling 26 years’ immediate imprisonment.
According to Legal Futures, between July 2008 and November 2011, the group ran three companies – Plott Investments Ltd, which changed its name to Plott UK Ltd, European Property Investments (UK) Ltd, and Stirling Alexander Ltd.
Salesmen for the companies cold-called potential investors to sell them agricultural land that the companies had bought for minimal amounts, as well as land the companies did not own. Using sales scripts, misleading promotional material, and high-pressure sales techniques, they lied about the current and future value of the land.
People were persuaded to purchase land at vastly inflated prices, on the false promise of a substantial profit. The scheme extracted at least £4.3m from 110 investors and none of them have seen a return from what was also deemed an unregulated collective investment scheme.
The seed was sown. The growth in property development would now come in fractionalisation and advance sales. The alternative investment market was primed and marketing terms like “arm`s length,” “hands off,” and “armchair investments” all became commonplace in brochures advertising fractional property sales.