Property investors warned of get-rich-quick schemes

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The Independent Online

Consumers were yesterday warned not to be conned by property companies offering get-rich-quick schemes based on buy-to-let investments. The alert follows a court hearing this week in which the Department for Productivity, Energy and Industry (DPEI) successfully applied to have three property investment companies closed down.

Consumers were yesterday warned not to be conned by property companies offering get-rich-quick schemes based on buy-to-let investments. The alert follows a court hearing this week in which the Department for Productivity, Energy and Industry (DPEI) successfully applied to have three property investment companies closed down.

The three had offered expensive seminars, promising detailed instructions on how investors could build buy-to-let property portfolios worth £1m or more within a year. The companies also said they had access to a pool of new homes available for buy-to-let investment, on which they would offer discounts to scheme members.

The DPEI says hundreds of investors lost thousands of pounds paid to attend the seminars and they were not able to buy property through the schemes. DPEI officials are pursuing similar actions against several other companies.

Graham Chase, the vice-president of the Royal Institute of Chartered Surveyors, said investors should look out for similar scams. Several rogue advisers have begun targeting the sector, following a big increase in the popularity of buy-to-let property investment during the past three years. Chase says: "When a property investment scheme or training course is offering easy access to vast riches, consumers should immediately look for the catch."

Inside Track, one of the UK's largest property investment companies, called for the sector to be regulated, so consumers could have confidence in legitimate schemes. The company charges £2,500 for its two-day property seminars and £6,000 to join its investment scheme. In return, it promises access to heavily discounted investment properties around the country.

Anthony McKay, Inside Track's chief operating officer, said: "We are very concerned about the poor quality of service being offered by many companies operating in this sector."

The Financial Services Authority, the UK's chief City regulator, is not able to police property investment companies, because the schemes fall outside its remit. As a result, investors who are victims of rogue schemes are unable to claim redress from official compensation schemes.

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