The post you are reporting:
I was recently sent this, something worth being aware of, particularly if a company were to sell shares in the overall project rather than parcel the land off - just to give it more legitamacy. The directors of a large UK company have had their assets siezed this week for exactly this:
Commercial Property News
Land Banking Investment Schemes - Don't be scammed. Tania Coventry
Land Banking is a means of investing in land whereby land is purchased with the intention of keeping it until it can be sold at significant profit. Generally the land is purchased in anticipation of being able acquire planning permission.
As the credit crunch bites people may be tempted to plough cash into these schemes lured by slick advertising campaigns offering big returns on their money. However, be warned, many people have already handed over thousand of pounds for land that has little or no chance of being developed.
How does it work?
The Land Banking Company will generally buy the target land, which is frequently located in green belt or undeveloped areas protected from development by planning law. Alternatively, they may buy agricultural land where no development will be permitted. As the land has little development potential it is likely to be bought by the Company at a low price.
The land will then be divided into small plots. Sometimes you will see paint or poles on fields, which appear to divide the fields into plots, and this is a sign that it has been bought by a Land Banking Company. Such a scheme is often termed "a plot land development scheme".
The plots will then be offered for sale to the general public, frequently via the internet. A Land Banking Company may promote the land with the following:
•Claims that it is likely that restrictions on development will be lifted, and once planning permission is obtained, the plot will have a higher market value and can be sold at a substantial profit; and / or
•Offers to handle the planning application process.
The risk?
There are many risks associated with these schemes. However, the following key issues should be brought to the public's attention:
•Misrepresentation - There are many reported cases where investors have been lured into the scheme as a result of claims made by a Land Banking Company which are simply untrue. For instance they may mislead about the prospects of obtaining planning permission, or redevelopment, and in turn the investor is misled into believing that they may have the opportunity to sell the land to a developer at a substantial profit. The extent of the misrepresentation has varied, however, in extreme cases forged documents have been produced, including purported letters from the Land Registry suggesting the land has "official Land Registry planning approval". However, the Land Registry plays no part in the planning process and could not give such approval. Further to this a Land Banking Company may incorrectly state that they have well known banks and developers as partners to the scheme.
•Regulation - Land Banking Companies are often unregulated meaning that investors money is not protected if things go wrong. In some circumstances a land banking investment scheme may be classed as a Collective Investment Scheme and the operators of these schemes must be authorised by the Financial Services Authority (FSA). If they are not correctly authorised the FSA can pursue them. The FSA strongly advises that anyone who has been approached by an operator of a land banking investment scheme should contact the FSA consumer helpline (0845 606 1234) to discuss the scheme.
•Fencing and Neglect - Land bought frequently becomes neglected and the land then becomes unsightly. In many circumstances the local authorities can do little to remedy the situation and in the mean time the land can become a major issue to the owners of neighbouring land.