Industry insiders are urging expats building buy to let portfolios not to deal with rogue property sourcers and investment clubs.
Property Tribes, an online forum and information portal for landlords, has warned any property sourcer or club that is not registered with an official redress scheme will be banned from the site.
The move follows complaints from property investors claiming to have lost hundreds of thousands of pounds when deals turned sour.
The latest involves a woman who alleges the loss of £800,000 to an unscrupulous property sourcer. She paid him £6,000 a month for two years to manage property without a contract and without any charge over the property in her name on the Land Registry even though she believed she had purchased the home.
Unscrupulous operators and rogues
Mortgage brokers have also revealed that buy to let lenders are refusing to agree loans for homes bought through a property sourcer or investment club.
“Following on from an increasing number of calls we are getting from people who have lost life-changing amounts of money to deal sourcers, portfolio building companies, and other such entities, Property Tribes has taken the decision to only allow deal sourcers who are registered with an independent redress scheme to post on this site,” says the web site.
“The deal sourcing arena in particular, is largely unregulated and therefore attracts many unscrupulous operators and rogues, with many one-man bands operating with no redress for consumers.”
The property market is plagued with scammers who offer ‘buy to let education’, courses and mentoring costing thousands of pounds.
Call to protect consumers
Typically, the services are fronts for investment clubs offering below market value homes, discounts and managed investments that are dressed up as cheap deals for landlords.
The Property Ombudsman argues that in many cases, property sourcers and investment clubs are operating as estate agents and must obey the same rules.
This includes signing up to a redress scheme to protect consumers. The government approves three schemes – The Property Redress Scheme; The Property Ombudsman and Ombudsman Services (Property).
“The intention is that these new measures will aid with transparency, deter rogues posting on Property Tribes, and reward contributors who are compliant and have voluntarily committed to professional standards,” says the web site.
