How to Understand Buy-to-Let Scams24 Apr
Property prices have come down and it is no wonder then that people fall for scams which promise to buy property cheaply and rent it out, earning handsome income for the buyers.
You open a leading financial paper and see huge advertisements by property companies saying that you can make a great deal of money by investing in property, which will then be refurbished and rent out. This would all be hassle free for you and the dealer promise good returns on the money invested, plus the property will be yours in any case. It all seems like a great deal and a good way to put money to use – everything seems kosher and you are lured by the promises, to put in your hard earned money, little knowing that it is all a scam.
It is a global phenomenon
If you think this happens only in U.K. or U.S.A., you couldn’t be more wrong. All over world there are cases of buy to rent scams. There are even simple rental scams wherein the person is asked to pay advance rent for a dodgy place. Or there are people who offer to rent your place (sight unseen) and then talk about sums of money which you have to collect from somebody else – more than the sum you are supposed to get and then you are supposed to wire the rest of the money to them. Except of course, the cheque that you will get will be dishonored and you will be out of pocket.
Big companies big bucks
In 2004, investors lost £ 100 million totally in buy for rent scams – the houses they were told they had ‘bought’ were either non-existent or uninhabitable and worth hardly anything. And there were big companies like Practical Property Portfolios and its associated companies, Napeer (Holdings) Ltd, Napeer Housing Ltd, Bluebell Housing Ltd, Aaron de Vere Ltd and Janspeed Consultancy Ltd. who cheated people.
More recently Morris Properties in the U.K. sold 1000 flats in a buy for rent scam where properties were sold at almost 100 percent more than their fair value. The proprietor, Simon Morris is facing legal action
Being careful
It is always better to be safe than sorry. Don’t get taken in by tall promises whether they are made through advertsiements in newspapers (which cost a great deal) or via the internet. Go and see the places for yourself and then only will you get an idea of the value of the property and what rentals you can realistically expect.
If you have fallen for a scam like this then you only have legal recourse. Go to the nearest police station and find out what you can do. If you can file a criminal complaint with the appropriate authorites do so, otherwise you will have to go in for civil action via a lawyer.
http://www.guardian.co.uk/money/2004/mar/06/buyingtolet.housingpolicy
http://www.thisismoney.co.uk/mortgages/buy-to-let/article.html?in_article_id=400467&in_page_id=56
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5375652.ece
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