Five ways to protect yourself from land banking fraud
1. Be suspicious
Always be suspicious if you are cold-called, no matter how plausible the salesperson seems.
2. Seeing isn't believing
Don’t be taken in by glossy brochures with lovely photographs - they prove nothing.
3. Always check
If a land investment company claims to own land, check that it actually does with the Land Registry (landregistry.gov.uk).
If the company claims that the land is likely to receive planning permission for development, ring up the relevant council and check whether this is true or not.
5. Use the FSA
Check the Financial Services Authority’s register (fsa.gov.uk/fsaregister) to see if the land investment firm is authorised to offer a collective investment scheme.
Also check the FSA’s ‘warnings’ page (fsa.gov.uk/warnings) for any alerts. You can also call its consumer hotline for advice on 0845 606 1234.
If you are concerned about the behaviour of a company, phone The Insolvency Service’s investigations hotline on 0845 601 3546.
If you think you may have been defrauded report your experience to Action Fraud online at actionfraud.police.uk or call the hotline on 0300 123 2040.
Seven of the 13 land bank schemes shut by the FSA
- Asset Land
- Consolidated Land UK
- Countrywide/Regional Land/Plateau Development Land
- European Property Investments
- Plott UK
What is land banking fraud?
Land banking is the practice of buying undeveloped land, dividing it up into small plots and then selling them on to individual investors at inflated prices.
The fraudsters will often claim that there will be big returns if the land gets planning permission for housing or other development. But the land - if it exists at all - is often green belt land protected from urban development by planning law, or agricultural land where development is never likely to be allowed.
Fraudsters always emphasise the potential profits while failing to disclose the true nature of the land. Even in the unlikely event that the land does have development potential, dividing it into small parcels makes it less attractive to potential developers anyway.
Generally speaking, insolvency is to businesses what bankruptcy is to individuals. A company is insolvent if the value of its assets is less than the amount of its liabilities, or it is unable to pay its liabilities (loan payments) as they fall due. It’s an offence for an insolvent company to keep trading, so the main options available to an insolvent company are: voluntary liquidation, compulsory liquidation, administration or a company voluntary arrangement.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.