Last updated at 6:47 PM on 24th October 2011
Britons have been told to beware of 'landbanking' scams after figures released today showed that they had doubled in just two years.
The details released by the Insolvency Service found that the scams, which see investors sold worthless plots of land, had gone up from 15 in 2009 to 30 this year.
The figures also showed that 67 per cent of victims were aged over 50 and above, while 44 per cent were aged over 60.
Company investigations, which is the part of the Insolvency Service tasked with tackling poor company practice, said that since March 2007 it had wound up 50 landbanking companies which had cost their victims £30m.
It is estimated that losses from all landbanking scams now exceed £200 million.
Landbanking companies buy a piece of land and subdivide it into smaller plots, which they sell on to individual investors at an inflated price.
The firms then cold-call potential investors offering undeveloped, usually greenfield land for sale, with the promise of huge returns when planning permission for development is granted.
They also use glossy marketing material that quotes experts, politicians and studies extolling the need for affordable housing and urban redevelopment.
However much of the land the companies sell is protected from development without planning permission under a blanket order known as an Article 4 Direction.
In some cases, companies have been shown to produce false land registration certificates and investors end up not owning the land.
It can be very difficult to differentiate between a real land banking scheme and an investment scam.
Consumer watchdog Which? said: 'We believe the land banking model can never work.
'Dividing land into individually-owned plots makes it less likely to be built upon, as no developer would want to deal with hundreds of separate owners.
'If the land investment company offers to manage the land on investors' behalf, it would constitute a collective investment scheme which would require FSA registration.
'Most land banking firms do not have this, leaving investors with little protection if the company goes bust.'
Jonathan Phelan, the head of unauthorised business at the Financial Services Authority warned consumers to be wary of cold calls offering the sale of land.
He said: 'Most of the money placed with these companies disappears and to make matters worse, as the firms are not authorised by the FSA, such investments are not covered by the Financial Services Compensation Scheme.
'As land banks often snare new investors by cold calling them, the lesson remains: if you are called out of the blue with the offer of land that is "guaranteed to rocket in price" - be very suspicious indeed.'
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http://www.dailymail.co.uk/news/article ... z1blAerE24
