Landbanking
The scam
You get a phone call, see an ad or come across an exhibition stand offering you a great 'investment opportunity' - a small plot of farmland. The plot will probably be in an area where house prices are high, perhaps near a town or city. The pitch is that, once planning permission is granted, you'll be able to sell your land to a housing developer and make a hefty profit.
This activity is often referred to as 'landbanking'. Be warned though: the promises of unscrupulous landbanking operators can turn out to be false.
Unscrupulous sellers use misleading advertising and high-pressure techniques to persuade you to buy agricultural land at vastly inflated prices. They will promise that planning permission is virtually guaranteed, and that the value of the land is bound to rise.
In reality, the land may be totally unsuitable for development and have little hope of ever getting planning permission. It could, for example, be located in an area of outstanding natural beauty, a site of Special Scientific Interest or a flood risk area, or be on unsuitable ground. The true value of the land might only be a fraction of what you are told it is worth. The land often ends up abandoned and neglected.
Protect yourself
- Question any claims that your investment will make money.
- Investigate the company carefully.
- Take independent professional advice about the status of the land and its future development potential.
- Ask the local authority how likely it is that planning permission will be granted.
- Some landbanking schemes may be considered in law as 'collective investment schemes' and so may need to be authorised by the Financial Services Authority. Contact the FSA consumer helpline on 0845 606 1234 for advice, or read FSA advice about landbanking on its website.
If you think you've been a victim of this scam, call Consumer Direct for advice on 08454 04 05 06.
