Land banking victims lose £200mConsumers duped on land purchase schemes
01 August 2011
Consumers have lost around £200 million by investing in near worthless plots of land, according to new figures from the Financial Services Authority (FSA).
The schemes, known as land banking, prey on those who are looking to profit from land they think will get planning permission but rarely achieve it. In order to help consumers get a better understanding, the Land Registry has created a new guide to land banking and who to contact if you think you've been affected.
What is land banking?
Land banking companies buy a piece of land and subdivide it into smaller plots, which they sell on to individual investors at an inflated price. At the unscrupulous end of the market, firms cold-call potential investors, offering undeveloped, usually greenfield land for sale, with the promise of huge returns when planning permission for development is granted.
Once you’ve invested, the company will try to lure you in further although often the land is protected from development without planning permission by local authorities. In some cases, companies have been shown to produce false land registration certificates and investors end up not owning the land.
Consumers need to be aware of land banking schemes
Jane Allen from Land Registry said: 'We know that many investors, living both in this country and abroad, hand over thousands of pounds for land that has little or no chance of being developed. Some companies offer UK land plots from the Far East where the local authorities do not regulate such activities, or are not aware of the high-risk nature of the investment.'