Scammers love to get involved in industries which are in the news and the general population is seen to be making easy money. Property over the last decade or so would therefore fit this bill.

This article looks at the scam called Land Banking.

What Is Land Banking

In the UK there has been a general lack of housing over the years, demand has been outstripping supply. The present Government has long been going on about building more houses publishing all sorts of reports such as there needs to be X thousand houses built per year for the next 20 etc.

There has also been plenty of talk about new developments having to be built on Brownfield and Greenfield sites.

The scammers have latched on to this talk by creating so called land banking companies. They will buy a field from a local farmer for a top price (so as the farmer will sell) then split this land up into what are basically individual plots. A field of 5 acres will be made to look as if it’s ready for 30 houses to be built in the future.

The individual plots are then sold (without planning permission) for several thousand pounds each. The carrot to get investors to buy is that one day their plots will receive planning permission and their value might rocket by several thousand percent.

The land banking firms all have nice websites with many quotes (from politicians about the need for more housing etc) and official research reports about how the UK needs an extra 1 million new homes etc.

The trouble is the odds of planning permission ever being granted on these plots is almost nil. But the Land Banking firms won’t tell you about this, they’re prying on their customers greed to massively overpay and only think about the money that might be made. This is a fatal mistake though as it’s always the downside that investors should focus on as the upside always takes care of itself.

Who Are The Salesman At These Land Banking Firms

Recently there was an advert that appeared on one of the investment message boards for a salesman at one of these firms. All that was mentioned was a small starting salary but plenty of bonuses per 'plot' of land sold. They were also looking for youngsters who were hungry to make money.

Interestingly enough there was no mention at all about qualifications or knowledge of property or the whole planning process which is incredibly complex. Therefore anyone who buys from most of these Land Banking firms will likely deal with an aggressive salesmen who knows nothing about the planning process. Chances are his last job was selling mobile phones or photocopiers.

Do Your Research - It's Critical

In the Army there's an old saying –

"Time spent on recognisance is rarely wasted"

And this saying works equally well when it comes to money and investments. The more research you do into what you're buying the better and more informed your final decision will be. Research is therefore of the utmost importance.

Those who have been interested in doing business with a Land Banking firm who in turn did their research would have likely come up with two conclusions -

1. 1. That most Land Banking firms are run and operated by scammers many of whom have past convictions for fraud, and
2. The plots of potential development land that they sell are almost worthless with no chance of getting planning permission within 20, if at all

Conclusion

The internet is your friend when it comes to money and potential investments because knowledge is power.

Researching isn't hard, it doesn't have to take days or weeks, just a few hours on the web is often all you need. But with knowledge you've got a powerful weapon, one which means you should be able to easily spot the sales pitches of the scammers.

See Also