Martin Lee @ Sg
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UK Land Investments Administration

In the current bearish stock market conditions, some people will probably be looking at alternative forms of investments. Land banking might be one of those being considered. I have written a few posts on this topic before but thought I will post some updates following recent developments in the UK.

If you are thinking of buying UK land for investments, remember to look at both the upside as well the downside. The thing about alternative investments is that the exit strategy might not be clear should things go wrong.

Just yesterday, I was reviewing some documents released by the administrator of UK Land Investments (UKLI). If you have not been following the story, you can read more about it here: UK Land Investments Administration.

It was a real messy affair with many land owners trying to recover their money after the company was forced to shut down.

One interesting point that I picked up from the transcript of the meeting of creditors was that the current property market in UK was real bad it was very hard for developers to get any sort of financing. As a result, some developers were not even starting construction of projects on their existing land that had planning permission.

Given such conditions, it would appear that any successful planning permission and sellout would likely take many years.

Another thing worth reading for clients of UK Land Investments was an independent analysis of the UK land sold by UK Land Investments. Apparently, many of them had little or no chance of getting planning permission.

Despite all that is happening in UK, the owner of UK Land Investments, Baljinder Chohan, is still continuing his land banking sales in other countries, one of which is Dubai. He operates there under the company name of UK Capital Investments Group (UKCIG).

Dubai’s authorities are currently checking on UKCIG’s activities of selling plots in the UK.

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5 comments
John16 says 14 years ago

Not really happy with them. ,

Reply
M Kuta_Dankwa says 15 years ago

Sirs,

I bought land from English Land Partnership in July 2006. I would like help registering the title and selling the property as I need some urgent cash.

Are you in the position to help?

The Land Purchase Order has Harpenden as the location of the land; no post code. I have found out that it could have been in Wheathampstead.

Let me know how you get, if you can help.

Regards

Michael Kuta-Dankwa

Reply
Chris says 15 years ago

I dont know anything about Canadian Landbanking but the fundamental problem with UK land banking plots is this.

Your investment is NOT in land.

The bulk of your investment is in a service. If that service is not delivered or not successful you are left with a pretty much worthless asset.

Typically the asset value of the land plot you buy is less than 10% of the total investment. In some cases its been as low as 1% to 2% of the total investment.

The 90%+ balance goes into the land banking companies bank account. They tell you they will use that money to obtain planning permission and suggest that it is highly likely they will get it. To the best of my knowledge no company offering UK land plots has obtain planning permission for any of those plots. A large number of the companies have either been closed down by the FSA or run away with the “service fees”. In some cases the land was never purchased either. There have been a few legally enforced refunds but most people have lost all of their investment.

I think the attempted “balanced” view of land banking presented here is a diservice to investors. Plot based land banking is now openly called a scam in the UK by the press and UK government. Here are a few links stating this.
I understand these carry no authority in Singapore but remember the underlying investment here is supposed to be UK land. I would not invest in plots in Singapore if the Singapore consumer groups told me it was a bad idea and companies were not allowed to operate there.

UK Consumer Protection Group
http://www.consumerdirect.gov.uk/watch_out/scams/landbanking/

FSA
http://www.fsa.gov.uk/pages/Library/Communication/Statements/2007/land_banking.shtml

Guardian – Top 10 Scams
http://www.guardian.co.uk/money/2008/aug/23/scamsandfraud.consumeraffairs1

UK Times – 10 worst property investments ever
http://timesbusiness.typepad.com/money_weblog/2008/06/post.html

Observer
http://www.moneyobserver.com/content/sod%E2%80%99s-law-comes-little-too-late

This story of real people losing money sums it up.
http://www.getwokingham.co.uk/news/s/2035797_finch_land_investment_casualties_stack_up

Reply
Jeffrey Yan says 15 years ago

I have read your interesting article regarding to the ‘scam’ investment about UK Land.
I have invested in some Land Banks through Walton Investment and recently had an ‘exit’for my Canadian land. As per advice from the land banker, I have carried on investing in land banks in US now.
I am not sure about the UK Land Banks but now after reading your article, am slightly worried about the US land banks.

Any comments from you.

Thanks

Reply
    lioninvestor says 15 years ago

    Jeffrey,

    Personally, I won’t be investing in non-liquid investments like land banking for now – both from a risk/reward perspective and the limited control.

    In your case, I believe it will be prudent to at least withdraw your capital, and only reinvest your profits. But it also depends on your overall portfolio size.

    I’ll let you know a bit more of my thoughts in a private email.

    Reply
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