Land
investment | | A
sound investment? Inside Out goes undercover. Photo of Stephen Cleeve c/o Neil
Jenman |
It sounds like the perfect deal - buy a piece of the
English countryside, apply for planning permission and sell it on to developers
for a huge profit.
But scores of investors across the country have been
tricked into handing over thousands of pounds for land that has no chance of ever
being built on.
An investigation by Inside Out has exposed one "landbanking"
company that has convinced investors to pay above the odds for sites that have
little or no development potential.
Commercial Land, formerly European
Land Sales Partnership (ELS), specialises in buying agricultural land and dividing
it into tiny plots, which it then sells to investors at £5,000 for every
0.02 acre.
It tells investors they could get a five-fold return on their
money if planning permission is granted.
What it does not say is that
the development potential of the sites it is touting is non-existent.
Three
employees tried to convince BBC journalists posing as potential investors to hand
over £10,000 for a small piece of land in Dorset that planners are adamant
can never be built upon. Sound investment?
Commercial
Land - which has never won planning consent for any of its holdings - is currently
marketing a four-acre site near the hamlet of King's Stag. During a meeting
at the company's London headquarters, a salesman claimed the local council had
written to them saying the land in King's Stag was "suitable for housing
and also for commercial use".
Another salesman, who said between
£30,000 and £50,000 could be made from a £10,000 investment,
claimed the quiet rural hamlet would soon be part of the suburban sprawl.  | | One
of the plot buyers, Satish Mehta, but is it a good deal? |
He
added, "go back there in five, six years down the line and it will be very
built up".
The company's own in-house planning specialist went on
to claim it would not be long before planning permission - for either residential
or commercial use - was secured.
He said, "It's just a matter of
time to see when we get planning permission in 2008 so it's not too far away.
"They
[the council] are always saying this is what we need at the moment."
In
fact, North Dorset District Council has told the BBC there is no chance of development,
not least of all because the area actually has an oversupply of homes.
Nick
Fagan, the council's Development Control Manager, said of the chances of the site
winning planning permission:
"Zero, nothing - there's
no chance at all of ever getting planning permission here.
"We did
send them a letter. It said there's no chance of developing this land, basically
ever.
"I feel this company is trying to sell land to people on a fraudulent
basis. They are cowboys and they should be closed down."
Big
money
If the company successfully sells all 112 plots at King's
Stag, it will make about £750,000.
Its main partner, Stephen Cleeve,
paid just £30,000 for the site in September 2005.
Mr Cleeve, who
is banned from being a company director for eight years after a previous investment
scam, has already been the subject of a public warning issued by the Australian
authorities over his tactics in selling UK land overseas.
In this country,
the Serious Fraud Office - despite deciding not to prosecute Mr Cleeve - has said
there is evidence that investors have been misled by ELS in the past.
The
company's sales tactics have certainly proved a success for Mr Cleeve over the
years.
In Oxfordshire, ELS made hundreds of thousands of pounds from investors
by selling land it said was ripe for development.
Investors were not told,
however, that the land near Eynsham lies in the Oxford greenbelt and in a floodplain.
No
build zone
West Oxfordshire District Council says it will never
allow building there.
One of the many investors who spoke to the BBC about
how they were convinced to part with their cash is Satish Mehta.
The 70-year-old
retired GP from Stockport paid £7,600 for his plot back in July 2004 and
was told the land was likely to be included in the local development plan.
He
said that he felt he had been "led up the garden path" and added: "I
can see I have been conned". In a statement, Mr Cleeve said that a
new member of staff had made a genuine error about the letter. It was actually
from the company's own planning consultants and contained their view of the council's
position on development.
He added: "We are not
free to discuss our planning processes as this could prejudice our chances of
gaining the relevant permission and, as such, would be doing our clients a disservice. "European
Land Sales is a bona fide organisation and has a strict disciplinary code. Any
breaches of our code are dealt with quickly. Several employees have already been
disciplined."
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Inside
Out - South: Monday September 25, 2006
