In the UK, property investment has long been regarded as a smart way to build wealth. Yet this has led thousands of investors in the UK and overseas to fall victim to sophisticated scams.
Property investment scams are rising. 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 article 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. And with most things that sound too good to be true… they are!
Promoting their investment schemes with all kinds of far-fetched or misleading promises, scammers will tempt investors into handing over vast sums of money before the transaction completes. Some of the most common mis-leading claims include:
- Guaranteed fixed rental income
- Buy-back agreements
- High returns on investment
- Hands-off management
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.
This means that, when the promised returns never materialise, investors are left out of pocket and, seemingly, with little to no recourse to recoup their losses.
The amount of initial investments typically range from £30,000 to £120,000, with many victims losing their entire capital due to poor regulation, failed developments, or mismanagement.
Common schemes
There are some particularly common types of property that scammers suggest are an ideal form of investment:
- Hotel room investments
- Student accommodation
- Office unit leases
- Storage pods
- Care home rooms
These scams often operate outside the regulatory framework and are illegally promoted to regular consumers despite FCA restrictions.
Who does it affect?
These scams specifically target inexperienced or first-time investors: people who will be drawn in by the promise of fast and high-value returns but do not have the knowledge or experience to know that they fall outside of regulatory frameworks and are therefore extremely risky.
Overseas investors who are unfamiliar with UK law and retirees looking for passive income are particularly vulnerable. There are, however, victims from all backgrounds, including middle-income earners or professionals who trusted the advice of their panel solicitors, who turn out to have been negligent in giving that advice.
Can I make a claim?
Thankfully, all is not lost. There is a way for victims of these scams to get some of their money back via a Property Investment Claim.
If you suspect that your investment was mis-sold or that you were not warned about the risks, you may be entitled to compensation.
Even those who used regulated solicitors or financial advisers may be eligible for compensation if they were not properly advised on the nature and risks of the investment.
You can potentially bring a claim against:
- The scheme promoters
- Financial advisers
- Solicitors (for professional negligence)
We are recommending Hugh James whose specialist team is currently pursuing claims on behalf of both UK and international investors.
They offer:
- Free consultation and advice
- No win, no fee representation
- In-depth investigations to identify liable parties
- Experience in high-value, complex financial litigation
Start your claim today
If you have any thoughts on this topic, or any other consumer issues you would like us to cover, feel free to get in touch with us at support@resolver.co.uk.