Showdown looms for landbanking
1. Mike08/06/2008 05:15:27
This is a key problem raised by the Tony Levene article.
According to those close to the investigation, the City of London police suspected UKLI of dishonesty in the way it presented its "expertise" to investors and in how it said they would be able to multiply their money many times with little, if any, risk.
The fraud squad spoke to planners in Kent and Essex, but while both counties said planning permission on UKLI sites within their borders was virtually inconceivable, neither could say housing would "never, ever" be built on the sites UKLI was selling.
The local authorities can’t ever say categorically that planning approval won’t happen because by doing so they would actually pre-determine the planning process. This loophole is exploited by the land bankers to suggest that planning approvals are almost certain.
The illegal collective investment approach is the only way to shut land banking down but its always too late and all the companies are doing is moving operations to other countries and selling the same UK plots from there.
The actual issue here is clear misrepresentation of risk and benefit. Where is the crossover point between "imaginative marketing" and fraud? It doesn’t matter. The ASA has few effective teeth and the fraud squad isn’t sure it has enough evidence.
I have heard people both in promotion of land , and defense of purchase say it wouldn’t be allowed if it wasn’t true. The lack of action by UK Government and local UK Councils is actively being used to endorse these schemes.
2. The Finchampstead Society08/06/2008 16:19:03
For some time now I have been promoting the idea that the only way to stop unregulated landbanking is to bring in a change in planning law requiring companies or individuals to get planning permission before they are allowed to subdivide a parcel of land larger than 1 hectare into smaller plots. CIS companies regulated by the FSA and any other bona fide non landbanking activities would usually not be refused if their applications did not conflict with the Local Government Authorities' planning policies.
If anybody has any better ideas on how to stop unregulated offshore landbanking companies continuing to blight our countryside and take advantage of uninformed investors living outside the UK I would be very pleased to hear of them on this site.
3. UKLI investor09/06/2008 18:40:20
Everyone who invested in UKLI needs to form a collective investment vehicle/consortium in order to see any return on investment. These are the options a) sell back to the company and recieve back approx 1-2% of what you invested b) form a strong consortium with ethical and honest planning professionals (unlike Chohan and Co) so that we can get something back. The truth is, some of the sites are good and do have potential. What ever happens everyone needs to stick together to take the project forward- otherwise you definitely will lose most of what you invested. Just fyi...the international UKLI is doing very well, with buildings being built across India & UAE, probably largely funded by the land investments. It's a real shame that the people responsible have dissapeared but hey ...anything for a quick buck.
4. Mike10/06/2008 00:08:54
UKLI Investor
I have sympathy for your position but I think you may be missing the point. If you constructively assume that UKLI was ahead of the curve, and did identify strategic tracts of land with huge potential then right now there ought to be knowledgeable commercial developers and investors queuing up to buy the land from you at bargain prices.
Demand and potential not marketing should determine the price of land.
This land was purchased at a low price and the same land was sold to you wrapped in marketing at a very high price. The lands potential did not change with the price unfortunately.
5. UKLI investor10/06/2008 11:45:39
Hi Mike
Agreed a lot of the sites that they had sold were a load of rubbish, however 1 or 2 have potential. For example, Borehamwood. I have been in extensive discussions with land planning professionals who believe that if handled with care and good timing, could have the potential to be allocated. It's not wishful thinking, its trying to make the best of a horrible situation where some people have lost their life savings. Doing something, is better than doing nothing I'm sure you will agree. Anyway- we shall wait and see until the creditors meeting. What is for sure, is that whilst we 'the investors' in this bogus company are suffering, the owners/directors/salesman are moving onto even bigger projects in less regulated parts of the world- with their reputations unmarked. Seems like the FSA have only punished the people that they should be protecting.
6. simon10/06/2008 21:02:13
land banking is not a scam in my opinion, it is just a huge game of monopoly whereby, now the smaller investor can participate. landbanking firms are to land as what brokers are to stocks to a certain degree. there are many business's like supermarkets who landbank (agricultural land) primarily for hedging purposes and capital growth as they are in the business of food, as land is seen as a reliable and stable investment. land banking has been going on for generations. the basis of all wealth is generated from land, good quality land is probably our most precious asset.
however the misrepresentation of the investment, misleading and being unethical is obviously wrong, so these companies should be shut down. regardless of the existance of certain land banking firms, if you have the title deeds you still own the land. and should be expected to promote it yourself. however if you made stupid decision in the first place and your land is not in a good location and is not suitable, then by monopolies standards, you will not recieve $200 when you pass go or a payout when someone lands on it.......
from a conceptual perspective, it is a sound investment if it is done correctly. for instance, the UK is a small crowded nation, our towns and cities are in high housing need due to immagration and generally a growing population. regardless if a site has one or a million stake holders, if there is a shortage of suitable land to develop on then this will not be excluded as a viable option, ultimatelt there will be no choices. who really thinks that the planners in local government sit and say, "ok we can expand here and here but this land belongs to 100 people so we wont, where else, over here, but that belongs to 30 people, ok then we can develop here, but the land is not sustainable. oh well too many people own that other land so lets steer clear.". in a nutshell, there simply is a limited choice and who owns it does not come into question in the planning stages.
all the landbanking firms are doing is breaking down a larger site into smaller more affordable plots, think about what they are doing, in comparison they are purchasing a small plot of land in comparison with all other lands surounding it (i.e the UK or region). then in their domain doing the same thing (breaking it down into smaller plots) on a much smaller scale for their investors. the investor still owns that land in accordance with the UK land registry if you get the title deeds on exchange, so anything else in my opinion is just bizzare thinking.
some people really need to stop being sheep and think about things for a moment, obviously a piece of land close to existing residential developments, amenities and on appropriate land stands a much better chance of getting planning permission than one in the middle of the country side. nothing is gauranteed only risk and probability of success.
this industry is getting a lot of flake, like many others before them, there are rogues in every industry and this is not new. as for paying too high a price for something, well a fool and his money are easily parted...
just to offer a different perspective,
regards
7. Mike11/06/2008 13:55:44
Simon
landbanking firms are to land as what brokers are to stocks to a certain degree.
Stock Investing
I can normally sell my stock at around the price I paid for it or a litte more or less. I can know its value on a daily basis. Sometimes I do really well and sometimes very badly. The value of my stock does not change if my stockbroker fails. I can borrow against stock. I can sell stock any time I like.
Plot based Landbanking
Phase 1 Acquire low cost land close to someting that can be classified as significant and used in your marketing. e.g London
Phase 2 Market and sell same land in small plots at 15 - 30 times markup on what you paid for it. Offer end customer 3 to 10 times gain on what they pay you. Encourage customers to bring in other customers.
If the markup is questioned it is justified on the "magic sauce" the plot company provides. The "magic sauce" is a selection of the following ingredients. Short cut to planning permission via land experts, development consultants, local contacts, local influence, inside knowledge, PR and lots of report generation.
Phase 3 Apply for and get planning permission on behalf of all investors. Planning could actually start at the same time as phase 1 but never seems to.
Phase 4 Liquidate assets collectively and make all investors a lot of money.
All the companies seem to go through to phase 2 fine. I know of only one company that went to phase 3 and they failed to get planning permission. I think they only bothered because they have another much larger site in phase 2.
A number of companies have liquidated ( or been shut down) at the end of phase 2 with apparently no assets even though their gross profits were 1500% or more. UKLI seems to be an example of this.
Without planning permission the owners are left owning small pieces of land worth between 2 and 10% of what they paid. There is no easy method of putting a collective planning or sale agreement together (the magic sauce they paid for). They cant borrow againt it and its very hard to sell.
From Wikipedia on scams
Sometimes con men rely on naive individuals who put their confidence in get-rich-quick schemes, such as "too good to be true" investments. It may take years for the wider community to discover that such investment schemes are bogus.
Land Banking is the ideal place for a scam to operate because the identified potential returns are huge and all a long way into the future.
8. Steve Sharp12/06/2008 12:30:20
An excellent post from Mike, which needs no further comment!
The UKLI creditors' meeting of 24th June, should be very interesting.
9. Steve Sharp12/06/2008 13:03:43
The UKLI administrators' various reports available at the UKLI website, I must confess, make shocking reading. Any past, present, future propective 'plot owner' whether domiciled here or overseas would do well to carefully read these documents!!
10. UKLI investor24/06/2008 17:44:53
Did anyone go to the Delloite seminar today? What was the general outcome? Is there any hope for the investors that these scam artists left behind?
Articles
-