12/05/2005
Government clamp down on property scam
The Department of Productivity, Energy and Industry (DPEI) has recently closed down a buy-to-let scam, which promised to help investors make money on the property market.
Three companies linked to the scam – Sterling Mansion, Mansion Investments and CM2 Services – along with two related companies - Furniture Right and Seal Properties Ltd – were wound up at the High Court today, following confidential investigations by the DPEI.
The DPEI said that the companies took “substantial sums of money” from members of the public and promised them that they would help them to build a portfolio of properties worth £1 million in a year.
However, none of the investors achieved a £1 million portfolio and many of them lost tens of thousands of pounds in the process.
The DPEI said that each of the companies ran similar schemes, with common characteristics. These included: charging clients thousands of pounds to join the scheme; telling clients at seminars and sales meetings that they would be offered new build houses or luxury flats at discounts and without the need for a deposit; and offering to arrange mortgages for the properties that clients had bought, with rental income from tenants covering mortgage repayments.
The DPEI found that most clients ended up losing their substantial joining fees and ended up with no property.
The DPEI also closed down another scam offering purported investment in debts, which was said to produce annual returns of 100%. Investors again lost millions.
DPEI Minister Gerry Sutcliffe said: “These companies knew that their clients, who had all invested substantial amounts of money, couldn’t make anything like the returns that were promised. The schemes were completely misleading and set up with the sole aim of parting people from their money.”
The Royal Institution of Chartered Surveyors (RICS) said that consumers needed to use their judgement and common sense when considering such ‘get-rich-quick’ schemes, which appear to offer high returns at little cost.
RICS Vice-President Graham Chase said: “When a property investment scheme or training course is offering easy access to vast riches, consumer should immediately look for the catch. Only by checking that the service is being provided by reputable, properly regulated professional can customers ensure they are getting value for money and have a route of redress if something goes wrong.”
(KMcA/SP)
Three companies linked to the scam – Sterling Mansion, Mansion Investments and CM2 Services – along with two related companies - Furniture Right and Seal Properties Ltd – were wound up at the High Court today, following confidential investigations by the DPEI.
The DPEI said that the companies took “substantial sums of money” from members of the public and promised them that they would help them to build a portfolio of properties worth £1 million in a year.
However, none of the investors achieved a £1 million portfolio and many of them lost tens of thousands of pounds in the process.
The DPEI said that each of the companies ran similar schemes, with common characteristics. These included: charging clients thousands of pounds to join the scheme; telling clients at seminars and sales meetings that they would be offered new build houses or luxury flats at discounts and without the need for a deposit; and offering to arrange mortgages for the properties that clients had bought, with rental income from tenants covering mortgage repayments.
The DPEI found that most clients ended up losing their substantial joining fees and ended up with no property.
The DPEI also closed down another scam offering purported investment in debts, which was said to produce annual returns of 100%. Investors again lost millions.
DPEI Minister Gerry Sutcliffe said: “These companies knew that their clients, who had all invested substantial amounts of money, couldn’t make anything like the returns that were promised. The schemes were completely misleading and set up with the sole aim of parting people from their money.”
The Royal Institution of Chartered Surveyors (RICS) said that consumers needed to use their judgement and common sense when considering such ‘get-rich-quick’ schemes, which appear to offer high returns at little cost.
RICS Vice-President Graham Chase said: “When a property investment scheme or training course is offering easy access to vast riches, consumer should immediately look for the catch. Only by checking that the service is being provided by reputable, properly regulated professional can customers ensure they are getting value for money and have a route of redress if something goes wrong.”
(KMcA/SP)
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