dothesums blog

Recent television programmes have exposed, yet again, the dubious element in the property sector. It was ever thus I am afraid. I am old enough to remember similar scams in the nineteen seventies in the West Sussex area in the residential sector. Several solicitors, estate agents and valuers went to prison for fraud.

‘No deposit’ purchasing, where the investor’s cheque is torn up by the developer/vendor and in effect, receives a discount without the knowledge of the loan company, or bank, is deception. Not only are the banks deceived into lending one hundred per cent, or more, of the price of the property, but the Land Registry records show a false price, leading to inflated future price comparisons for similar properties. In a falling market, this will lead to negative equity and a loss of confidence.

Best not to get involved in these get rich schemes and concentrate on running buy-to let as a proper business based on sound business principles. There is profit to be made without resorting to these types of practices, it just takes a little more work that’s all.

The other issue to emerge often from such programmes is that of caveat emptor, ‘buyer beware’. One of the purchasers had bought four student properties, sight unseen and presumably without surveys. How daft is that?