Landbanking, as it is often called, is where a company purchases plots of land for resale to investors. There are some companies out there who do conduct themselves entirely appropriately and advise clients on the risks of such investments along with advising honestly on the land they are selling.
There are also companies out there who are acting fraudulently, acting dishonestly, lying to investors, giving overly exaggerated expectations of profit and promising to obtain planning permission on behalf of the investor along with guarantees of planning permission being granted.
Indeed i see many articles in the press of the regulators shutting these schemes down to protect the consumer. However, when people fall victim of these schemes, generally there is little that they can do to recover their monies.
Take the Asset Land Landbanking scheme, Asset were shut by the FSA, despite freezing orders being obtained is there any real likelihood that the investors who invested their life savings into the scheme would ever get their money back? The answer sadly is “No” not from the Asset Land company anyway. The directors of Asset Land are being prosecuted, any monies recovered will go to funding the legal costs of the regulators first and foremost in my opinion, secondly there is no guarantee that there will be any money recovered even with a freezing order.
But that does not mean that consumers are left high and dry. There may be alternate ways of getting your money back.
If you paid over £100 but less than £30,000 using a credit card (NOT DEBIT CARD) then you may be able to look towards your credit card provider for a refund. Now this is not a simple straight forward approach, the Banks and Credit card providers do not hand over money without any thought at all.
Firstly, the provision of the Consumer Credit Act applicable here is section 75(1) Consumer Credit Act 1974. Now section 75 only applies where there is a breach of contract or misrepresentation by the supplier ( Landbanking company) now most of the cases i have dealt with ( there’s been a lot) are based upon misrepresentation, generally the representations were fraudulent but this isnt overly relevant at this point.
Now this isnt legal advice, each case turns on its own facts, and its quite important that this is kept in mind. IF you have been scammed by a land banking company and you used your credit card then seek legal advice.
So, if you paid a deposit say £500 on your credit card, and the plot price was less than £30k, and if the supplier wasnt honest and said for example ” this is prime investment land which is ideal for development” when in reality it was a muddy boggy field with no prospect ever of development, then this may well be a misrepresentation and you may be able to reclaim ALL of the money from the credit card company.
Now for example, say you paid £500 on the credit card and £15k by bank transfer? well many people think all they can claim from the credit card is £500? well you would be wrong you could possibly get the whole £15,500. A perfect case as an example of this is Mal`ouf v MBNA which can be found on BAILII (ill add a link soon)
Now its important to say that there needs to be a misrepresentation or breach of contract for section 75, you cant claim your money back if you got exactly what they told you you were buying. So if they say this is a pile of shyte in a field which will never be redeveloped ever and you still pay your money then your being very silly and cant complain in my view, the old saying caveat emptor springs to mind.
The legal arguments in such a case are quite complicated and can be made more tricky when you have companies such as Asset LAnd who used Equity Services London Limited to take their payments, the banks will argue this breaks the chain of the debtor creditor supplier relationship needed for section 75, however as HHJ Halbert made clear in Mal`ouf the banks arent always saved by this point.
There are also some banks that try and argue that if you purchased 3 plots at the same time and each plot was £15k then you would fall outside of s75 as the total is over £30k, again this argument is simply defeated. I have yet to have a bank succeed on such arguments.
The Ombudsman service sadly is weak at best, if one looks at Mal`ouf for example, the FOS said words to the effect “there is no fraud no misrepresentation no breach of contract” contrast that with HHJ Halbert who made it clear from the off that this case was soo clearly fraud that Stevie Wonder could see this while horseback in the Gobi Desert , so im afraid i dont have much faith in FOS at this point.
However, there is a way there for people to look into reclaiming some if not all of their lost money. I would be more than happy to appraise a case for anyone who has suffered at the hands of land bankers and give my thoughts on the merits of the case and how we can help to get their money back.