Rising house prices in the UK over recent decades have made property one of the most attractive and lucrative types of investment. But criminals are taking advantage of this fact to con people out of thousands of pounds by duping them into buying near-worthless plots of land.
This type of scam is known as land banking, and City watchdog the Financial Conduct Authority (FCA) has warned than older people in particular are at risk of being targeted.
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How land banking scams work
Typically, land banking involves a company buying up undeveloped land such as farmers’ fields and then splitting the land up into smaller plots.
The company then contacts individuals – often by cold-calling – to persuade them to buy the plots. Sales staff usually suggest that the land is about to get planning permission for the building of houses, which means that the value of individual plots is expected to increase dramatically.
In reality, however, such permission is rarely sought by nor granted to these companies, and the investors are left with the rights to practically worthless pieces of land.
Some land banking scams involve land in the UK, but it is also common for overseas plots to be sold. In some cases, victims will not even be given a genuine claim to the land they have supposedly bought.
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Who is targeted by these scams?
The criminals who carry out land banking and similar investment scams are generally looking for people who have large amounts of spare cash and who want to make decent returns on their savings. This means older people are more likely to be targeted given the fact they may have substantial levels of cash savings as well, potentially, as access to at least some of the money in their pensions.
Some fraudsters use cold-calling or spam-email tactics (where emails are sent to millions of addresses in the hope of generating a handful of potential leads). Others may gain access to marketing databases which show individuals’ ages and financial status, this enabling them to make more targeted approaches.
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How to protect yourself
There are two good rules of thumb when it comes to investment opportunities: firstly, be extremely suspicious of cold calls or emails from people or companies you have never dealt with before.
And secondly, if an investment sounds too good to be true, it is probably a con.
The FCA has an investment warning list which you can use to check whether a possible investment opportunity is likely to be genuine or not. The FCA also lets you see whether the company you have been contacted by is on its list of “firms to avoid”.
Bear in mind, though, that if a company has not been identified by the FCA as a potential scam, this does not mean it is a safe bet. It could either be a completely new group of fraudsters or an old scheme that has changed its name.
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