Banks distance themselves from land deal
A land investment scheme could leave credit card firms paying out, reports Maggie Drummond
Saturday 17 July 2004
Leading financial institutions have demanded their names be removed from a property website that listed them misleadingly as "partners" following investigations by
The Independent into UK Land Investments Group.
Leading financial institutions have demanded their names be removed from a property website that listed them misleadingly as "partners" following investigations by The Independent into UK Land Investments Group.
The group's website is offering small individual plots in the heart of rural Kent as "an excellent investment opportunity" at about 30 times the price paid for the farmland by the company just a few months ago. The land is in the middle of a flood plain and the local council says it is unlikely to ever get planning permission for housing.
Until a few weeks ago UKLI, which has been in business for two years, was claiming HSBC, NatWest and Royal Bank of Scotland as "our partners" in what is being condemned by local planners, farmers and villagers as a property hype that threatens the future of the countryside.
Reference to all three institutions was removed from the website and an apology made after they complained to UKLI. Asked by The Independent to explain why the company had described these institutions as partners before being asked to remove their names, the UKLI sales director, Sudhir Kundi, said "We bank with them", before putting the phone down.
Ironically, the action taken by the banks may mean they are forced to fork out thousands of pounds from their credit card operations. This could happen if customers, who used their credit cards to buy plots in the belief that these institutions were indeed partners with UKLI, invoke their consumer rights under their credit card agreements to claim their money back because of what they might claim to be misrepresentation.
Ian Barber, spokesman for Barclaycard, which has been providing the transaction portal for the website, said: "If UKLI has been advertising in a way that is misleading, credit card companies could be liable to reimburse the people who have bought these plots. But we have no evidence of that."
Barclaycard is continuing to provide online processing for people putting deposits on plots of land. Stuart Doignie, a Barclaycard Merchant Services investigator, said: "There is nothing we have seen to suggest that UKLI is doing anything illegal. And we are satisfied the company is offering a very fair reimbursement policy for people who place a deposit and change their minds, as quite a high proportion of them seem to do."
Visitors to the UKLI website will see dozens of one eighth of an acre plots near Paddock Wood in Kent, offered for between £15,950 and £17,050. The same land changed hands at around £3,500 an acre in March this year, when 180 acres of farmland on the outskirts of the village of Laddingford was sold for £640,000. UKLI appears to have sold about half the plots already for an estimated £3m.
Although UKLI says it offers no guarantee of planning permission, purchasers are encouraged to believe they may one day be able to build a five-bedroom house on their plot. Projections of the "investment potential" show a one eighth of an acre plot, purchased for £25,000 now, being worth £234,581 in 15 years, even without planning permission. The possible value with planning permission is shown as more than £400,000.
Individual plot owners are dissuaded from applying for planning permission as soon as they buy by the promise that UKLI will seek this for them collectively by lobbying local councillors and planning officers when all the plots are sold. Since The Independent started its investigations UKLI has started to offer purchasers a guarantee of their money back if planning permission is not granted within 10 years. It is not clear whether this will be worth anything unless UKLI is still in business then.
The plots are on agricultural land in the middle of a flood plain and,following legal action by the council, the new owners are prevented from even marking out their plots with stakes or fences.
Mr Kundi said: "I agree the land is on a flood plain, but developers can find ways round that problem. As commercial developers we are in a much stronger position than an individual seeking planning consent on their own. We can offer the council social housing or a health clinic on site, and there are authorities above the local council that we can take the matter to. More housing is needed in the south-east, and people buying our plots are taking a 25-year view on the investment potential of this land."
The Independent has established that unhappy purchasers who reserved their plot of land for £1,595 with a credit card may be able to recoup the whole of their £15,000-plus purchase price if they can demonstrate that they were misled when they bought the land. If you think you have a case for misrepresentation you must approach the credit card company. If you are turned down you should go to The Financial Ombudsman Service on 020 7964 1000."
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