Thursday, 1 September 2011

Buy To Let Scams And The Property Boom Fraudsters



The Serious Fraud Office recently confirmed that, with the collapse of the mortgage lending and property markets, buy-to-let scams have emerged to take advantage of the crisis.

UK detectives are looking at cases which involve millions of pounds in alleged property fraud, and are investigating many cases involving thousands of property investors worldwide. Closer to home, there have been a number of high profile off plan, buy-to-let frauds involving hundreds of properties in the cities of London, Liverpool, Cardiff, Nottingham, Derby, Manchester, Leeds and Hull. 

Recently, five directors of the north east based company PPP ltd (Practical Property Portfolios) and its sister company Napeer Holdings Ltd pled guilty in court to fraudulent trading charges.

Newcastle Crown Court heard that the companies lost £65 million of investor’s money and were wound up as a result of these losses. PPP sold 4000 residential properties for £80 million. Investors had paid fees of £25,000 for their investment properties, with a “rental guarantee”.

Also,  police were investigating an alleged £2 million multinational property fraud involving a York based company, Chancellor Property Developments Ltd., after they arrested and bailed four people on suspicion of conspiracy of money laundering and fraud.

Yet another company in the Midlands, Ocean View Properties, was suspected by Liberal Democrat MP, Norman Baker, of involvement in another property scam. The company’s accounts were shown to hold debts of more than £100 million, and property investors based in the UK are believed to have lost millions of pounds through their dealings with them. Investors were buying £70,000 off plan apartments in Spain and the Dominican Republic through Ocean View Properties.

In the Republic of Ireland the assets of Breifne O’Brien, totaling some £32 million, were seized, including exclusive properties in Dubai, Dublin, Paris and the Caribbean. Mr. O’Brien had been accused of operating a pyramid scheme aimed at property investors. Mr. O’Brien had to answer accusations leveled against him in the Irish Commercial Court.

Over 15 years Mr. O’Brien had allegedly channeled money from property investors to fund his luxury lifestyle and business interests. In 2008 the Association of Chief Police Officers reported that some £700 million pounds had been defrauded from mortgage lenders in order to launder money from prostitution and the drugs trade. Most of these frauds were designed to overvalue newly built apartments, purchased with false documentation. 

Thanks to such scams, it is now harder than ever to gain mortgages for buy-to-let properties and new build apartments

As property guru Martin Brennan said in interview recently, "...most of these outfits go one of two ways;


1. They disappear after a year or so of taking peoples money.
2. They appear on BBC Watchdog ...and then come under item 1. above.

Anybody in the property game knows very well that the best property buys are completed discreetly and quietly."

British crook to face land scam charges



Gary Robb in front of the Kyrenia development

A BRITISH criminal currently serving a prison sentence for drug dealing in the UK will soon be extradited to Cyprus to face accusations of developing and trading in Greek Cypriot properties in the north, the British Crown Prosecution Service (CPS) confirmed yesterday.
It will be the first time the Cyprus government has brought a case in Cyprus against an individual for the illegal development of Greek Cypriot property in the north.
Forty-eight-year-old Garry Robb, who escaped to northern Cyprus after being released on bail for drug dealing in the UK in 1996, will be re-arrested and deported to Cyprus on July 13 - immediately after he is released from jail in Britain, the CPS told the Cyprus Mail. After 13 years of hiding out in the north, Robb was sentenced to five years when recaptured in January 2009, but will be released on parole next month.
Before his recapture by British police in 2009, Robb established AGA Developments, a property development company that allegedly lured hundreds of unsuspecting Britons into investing in villas and apartments built on Greek Cypriot-owned land in the north. British police believe around 400 Britons collectively lost in the region of 35 million UK pounds in deals with Robb’s AGA Developments. AGA’s notorious Amaranta Valley project located close to the north coastal village of Klepini still consists of 500 rapidly decaying half-built properties.
According to information provided by the CPS yesterday, the European Arrest Warrant (EAW) charges Robb with nine offences and states that “between 2004 and 2005, the defendant conspired with others (named as Tuncel Tahir Soycan and Akan Kursat Talat) to develop land which did not belong to them, and to sell villas built without permission upon that land by means of false representations to the prospective purchasers”.
All cases against Robb refer to properties he sought to develop in the Kyrenia district and “concern the fraudulent sale or offering for sale of villas on the illegally-developed plots of land”.
Two other charges cited in the EAW accuse Robb and his compatriots of conspiracy to commit a felony and conspiracy to commit a misdemeanour. All the alleged offences are believed to have occurred between April 2004 and April 2005.
If Robb does appear in a Cyprus court, Greek Cypriot judges will not however be focusing on the losses of unsuspecting Britons, but on the losses of the Greek Cypriot landowners whose properties he dealt in.
As Greek Cypriot lawyer Constantis Candouna told the Cyprus Mail yesterday, “It is the Greek Cypriot refugees who are the victims. For the Brits, it was as if they were buying stuff off the back of a lorry”. He advised Britons who had been cheated by Robb to apply to courts in the UK or the north.
European arrest warrants for Robb and his two AGA associates Tahir Soycan and Akan Kursat were first issued in 2005 by a Nicosia court amid allegations the three were trading in illegally acquired Greek Cypriot properties in the north. Turkish Cypriot police however did not act on the warrants because the territory remains outside EU jurisdiction, and because its authority did not view Robb’s selling of Greek Cypriot property a crime. Britain, it seems, has waited for Robb to serve his sentence for drug dealing before deciding to enact the EAW.

Chris Douglas - Challenor Property - CLICK HERE


Chris Douglas

Shaun Kiely Property Investment - CLICK HERE


Shaun Kiely

Jim Moore - Inside Track - CLICK HERE


Jim Moore

Chek Whyte - Secret Millionaire - CLICK HERE


Chek Whyte (Anthony Beardsley)

Buying Off Plan Property: Who Really Makes the Money?

One of the most popular ways to buy property is buying off plan.
But what the heck is "off plan", and what’s all the hype about?


Off plan means buying a property that doesn't exist. In other words, you're relying on a development company to build your property.

The big 'HYPE' is that if you decide to invest in the right development project, then you, as the investor, can make some serious money.

Let’s have a look how a typical off plan investment works.

You’ve been reading the ads in the Sunday newspapers again, haven’t you?
You’ve seen an advert for a fabulous new development that’s being planned. At the moment, however, there is nothing there yet. It is merely a developer’s idea, presented with some fancy pictures and inflated financial returns to get your juices flowing.

You’re invited to invest in this scheme. If you invest early, the developer will give you a 15% -40% discount. You only need to sign the contract and hand over the first 10% as a deposit. After that, you’ll make regular periodic payments in accordance with your contract until the development is completed.
You can sell your contract during construction, or sell the property after completion to make a nice juicy profit.

Okay, let’s stop here!

First, let’s take a look at the idea from the developer’s perspective, and then we’ll look at it from the investors’ perspective.
The developer has an idea. He’s seen a plot of land or some dodgy rundown building where he wants to build make some serious money. But he has a problem. He has no money to start the project. He can go to the bank to borrow the funds, but the Bank won’t lend him the money unless he can provide security.

The developer plans to develop the project  at a cost of £20 million pounds, but he doesn’t have the money. He only has enough funds for drawing up the plans and printing the advertising brochures....oh and of course a fancy website.

The land costs £2million. He needs another £2 million for putting in the infrastructure and £10 million to build the actual development. The Bank advises him that if he owns the land, it will lend him the £2 million. Once he puts in the infrastructure, the project can be started. He’s in a fix.
How is he going to raise the £2 million for the land?
This is what he does…

He markets the off plan for his development via thousands of on-line real estate agents from around the world. Early-bird investors jump in with their 10% deposits. The developer then uses the investors’ deposits to pay for the land/building. He then goes to the Bank to borrow the other £2 million for putting in the infrastructure. The Bank lends the £2 million and puts a first charge over the land.

At this stage, administrative staff from the developer’s office is collecting the next round of payments from the investors, usually around 30% of the total. Now the developer will have the funds needed to start construction and pay the builders. If all goes well, the project has been started, without taking any money from the developer’s bank account.
This, in short, is how the buying off plan development process works from the developer’s perspective.

Now let’s have a look at the same off plan process from the investor’s perspective.

You, as an investor, can secure a unit at a 15+% discount if you purchase it quickly. You don’t want to miss this opportunity, so you decide to fork out the 10% deposit and pay the developer. The sales team has promised you that you can sell your contract at any time during the construction phase to make a nice, hefty profit.

Let’s look at an example.

Flats are retailing for £87,500. You’ve secured a 30% discount on this price, so you’ll pay £61,250. You need to secure this unit by putting a 10% down payment of £6125.

A year later, the price increases by 10%. The flats that were valued at £87,500 are now worth £96,250. If you sell your contract at this new price, you’ve made £35,000.

You could hold on for another year, or sell before the construction is completed.

The remainder would probably be covered by a 70% mortgage. If prices rise by another 10%, you could probably sell your share for even greater reward.
You’ve more than doubled your money! 

Okay, now let me tell you the bad news that no one else mentions!
  • You need to sell your flat  within a tight time frame. Actually, you need to sell it before the next payments are due. In order to do this, you need plenty of buyers and a liquid market.
TELL ME SOMETHING.... why the heck would someone buy your resale property when he or she could go directly to the developer and get a discount? The only way the developer will help you sell your property is if the development is already sold out. However, the problem is that the developer has just started a new development down the road, where he is selling off plans to more new investors at a discount. Guess which property will attract your potential buyers?

  • If the project goes down the pan, how will you get your money back? You can’t get a refund for your deposit, because the money went to pay for the land that is now mortgaged by the bank.
The bank will get its money back, as it secured a first charge over the land, but unfortunately it was your money that went toward the purchase of the land.
  • Prices must be rising quickly for this scheme to work, because if they are rising slowly or are static then you’ve made nothing.
  • You are dependent on the initial valuation being correct. If the property is overvalued by even 10%, you will lose money.
Buying off plan is fine if you love the development plan and intend to use it for your own retirement. But I guarantee that if you look in local newspapers in any country around the world, you’ll find lots of desperate buyers trying to sell their own off plans at a third of their sale price on the resale market.
Buying off plan is ideal for the developer. But they’re not the way for investors to make money. It’s the developer who makes the money with off plans.

...and this does not take account of the fact that in many cases the development is never even completed, the company disappears with your money and any guarantees you have been given are completely worthless!!