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A slew of allegedly fraudulent buy-to-let schemes have wiped out the savings of a large number of junior investors in every major UK city, it was feared last night. Keen to cash in on rising property values, notably from 2004 to 2007, those affected grabbed a “discount” on allegedly overpriced flats, marketed to “guarantee” rental income. But the vow of healthy returns was not kept; promised tenants failed to emerge and with today’s slump of up to 50% in prices, indebted owners have little choice but to sell-up. The scale of the alleged scam, two of which the Serious Fraud Office is examining, has only started to come to light due to the credit crunch and plummeting property prices. Disclosures seen by a Sunday paper add that the suspected frauds involve properties in buy-to-let hotspots including Cardiff, Nottingham, Liverpool, London, Leeds and Glasgow. The Sunday Times also reported that police in Greater Manchester, West Yorkshire and the West Midlands are making similar probes, following shrieks from burnt investors. One police chief, whose force is scrutinising hundreds of allegedly fraudulent buy-to-late deals, told the paper that the losers, some of whom were £500,000 in debt, were UK-wide. “We can expect to see one or two of the same type…emerging in every major city,” he said of the schemes, which were facilitated by some of the UK’s major banks. As a result, Northern Rock, Royal Bank of Scotland, HBOS and Bradford & Bingley, all of which the state has taken stakes in, stand to lose out, like investors. But the banks’ total losses are expected to run into the millions, having granted mortgages for properties that may, in fact, be worth only half what they were valued at. One firm fingered by police, Morris Properties, has denied accusations from lawyers on behalf of 133 of its former clients that it oversaw a scheme that sold flats to investors for as much as 100% above their real value. Dec 22, 2008 Email this article Printer friendly page Previous Page
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