Free Guide – Property Investment Scams

About this guide

While property investment has long been regarded as a smart way to build wealth, thousands of investors in the UK and overseas have fallen victim to sophisticated scams. 

Many of these schemes are structured as Unregulated Collective Investment Schemes (UCIS), where investors are mis-sold leasehold interests in hotel rooms, student flats, storage units or care home spaces with false promises of guaranteed returns and buyback options. 

If you’ve suffered financial loss from one of these schemes, you may be eligible to claim compensation.

In this free guide we explain how you know if you’ve been victimised and what you can do to get some redress. 

What is a property investment scam?

A property investment scam typically involves sales agents promoting schemes that they promise will bring high financial returns. Most of these arrangements are unlawfully operated CIS, where multiple investors’ funds are pooled to fund the development and initial returns. The structure is inherently high-risk and frequently collapses. 

There are some particularly common types of property that scammers suggest are an ideal form of investment. These include:  

• Hotel room investments
  
• Student accommodation
  
• Office unit leases
  
• Storage pods
  
• Care home rooms 

Scammers promote these investment schemes with all kinds of far-fetched or misleading promises. Some of the most common mis-leading claims include:

• Guaranteed fixed rental income
  
• Buy-back agreements
  
• High returns on investment
  
• Hands-off management 

Drawn in by the promise of fast and high-value returns, most people who become victims of this kind of scam do not have the experience to know that they fall outside of regulatory frameworks and are therefore extremely risky. 

Common targets include:

• Inexperienced or first-time investors
• Overseas investors, unfamiliar with UK law
• Retirees looking for passive income 
• Middle-income earners  or professionals who trusted the advice of their panel solicitors, who were negligent in giving that advice 

What is the best way to claim?

Whilst Unregulated Collective Investment Schemes are not regulated by the FCA, you can complain about the firms that mis-led you with bad advice. The Financial Ombudsman will also investigate complaints against the promoters of such schemes, often firms of accountants or solicitors. 

This guide takes you through the process of making a claim against solicitors, accountants and other regulated firms and how to escalate to the FOS. If this is not an option in your circumstances, or you would rather make use of legal support, we have a recommended provider that can do most of the legwork for you.

Ultimately it’s your decision which process you follow. We are obliged to state clearly that the guidance we give here does not constitute legal advice.

If you have any questions please reach out to us at support@resolver.co.uk.

Get help with your claim

Step 1: Find out whether you were affected

You may have been caught up in one of these scams if you were promised significant returns which never materialised – leaving you out of pocket and, seemingly, with little to no recourse. Investments typically range from £30,000 to £120,000, with many victims losing their entire capital.

Especially if you were an inexperienced investor and were given advice that, in retrospect, was mis-leading, then you may have grounds to make a claim against those who advised you or advertised the scheme.

Step 2: Find out who to complain to

Unregulated Collective Investment Schemes are not regulated by the FCA. So if you have lost money in an Unregulated Collective Investment Scheme (UCIS), the route to making a complaint or claim depends on who promoted or advised you about the investment.

Where the scheme was promoted by solicitors or accountants…

If a firm of solicitors or accountants promoted, recommended, or facilitated your investment and did so negligently or improperly, you may have a stronger and more straightforward route to redress.

Why this matters:

• Professional firms are required to hold Professional Indemnity Insurance (PII). 
• This insurance is specifically designed to compensate clients who suffer losses due to professional negligence. 

What you can do:

1. Make a formal complaint directly to the firm 
   • Set out clearly why you believe the advice or promotion was negligent. 
   • You can do this yourself or via Resolver. 
2. Escalate to the relevant regulator if necessary 
   • If the firm is a solicitors’ practice, you can complain to the Solicitors Regulation Authority (SRA). 
   • If the firm is a chartered or certified accountancy practice, complain to the relevant professional or regulatory body (for example, ICAEW, ACCA, or equivalent). 

Regulatory complaints can add pressure and support your position, even where compensation is ultimately sought through the firm’s insurers.

Where the scheme was promoted directly by property developers or scheme operators…

If the UCIS was promoted directly by a property developer or scheme operator, with no solicitors, accountants, or other regulated professionals involved, pursuing a claim is usually more difficult.

Why this is harder:

These promoters are often unregulated and do not carry professional indemnity insurance. This means that any claim would normally require court proceedings, which can be expensive and risky for an individual investor.

What may be more effective

In these circumstances, joining a collective or group action is often more cost-effective than acting alone. Instructing a specialist firm such as Hugh James to pursue a collective claim can reduce individual legal costs, increase negotiating leverage and spread risk across multiple claimants. 

Start your claim today 

Step 3: Submit a complaint to the FOS 

While the FOS cannot consider complaints against unregulated businesses themselves, it can assist where regulated firms were involved in promoting or advising on the investment. In other words, the FOS will investigate complaints against the promoters of such schemes, often firms of accountants or solicitors. 

To make a claim for redress from the FOS, you must have the details of the firms who gave you bad advice and encouraged you to invest in the scheme.

You will need to provide evidence, gathering any documentation you have and collecting as much information as possible about the agreements. You can then use the template provided on the next page to submit your complaint to the FOS.

Letter template

Step 4: Wait for a response

You should receive an acknowledgement of receipt within one month. If you haven’t make sure you:

• Check your sent box – make sure that you definitely sent the message
• Check your junk mail – make sure the reply wasn’t marked as spam
• Check the address you sent it to – compare with the firm’s website to ensure it is the correct contact

If you have done these and still have no response from the FOS you should chase them up.

How much compensation can I expect to receive?

The amount of compensation you may receive is intended to cover the financial loss you suffered and, as far as possible, put you back in the position you would have been in if the negligent or fraudulent advice had not been given.

However, it is not always possible to recover the full amount lost. The final amount may be reduced if there is evidence that your own actions played a part in the loss, such as how you went ahead with the investment. This could affect how much can be recovered from the promoters or their advisers.