In a letter to the Chancellor of the Exchequer Rishi Sunak and the Chair of the Financial Conduct Authority, Charles Randell I have demanded that action be taken to regulate the property development market which he describes as being like, “the Wild West”.
In a letter to them asking them to consider the regulation of various aspects of the property market I said,
“The UK’s reputation as a place to invest has taken a global hit because of property scams which have seen people all over the World lose money in investments where extravagant promises were made and projects abandoned in some cases without a foundation being laid.
I am also copying this to Parliamentarians and asking them to do what they can through an All Party Parliamentary Group or through the Select Committee system to highlight these injustices.
I am ready at any time to assist you in this work should you choose to do as I hope and bring regulation to bear into the this ‘Wild West’ part of the UK’s economy”.
As you know that through what I have done and said on this issue over the past 5 years I believe that the problem has its epicentre in Liverpool and have asked them to regulate this complex industry which many are trying to use for pensions and other long-term investments.
I have also asked MPs and Peers from all Parties to take action through the use of Select Committees and the development of an All-Party Parliamentary Group to take action on behalf of the thousands of people who have lost between £1 and £2 billion and possibly more.
The full letter is attached here:
Financial Conduct Authority,
12, Endeavour Square,
London E20 1JN
2nd February 2021
Re: Investment in properties using property bonds, fractional investment and similar devices.
Attached to this letter please find an article form our local newspaper, the Liverpool Echo, which shows the serious losses made by on investor in Liverpool’s murky property scene. I put Mr Hopkisson in touch with the Echo because I wanted to show the human cost of the investments which have failed so miserably. I could have put hundreds of similar cases before you from people from all over the World who have lost their hard-earned savings because they have entered into a market which they assumed to be operating transparently and lawfully and found quite the reverse.
I don’t know how much has been lost in Liverpool because there are two lots of losses:
Firstly, from people whose block was never completed or part completed. The report attached from the City Council showed that in mid-November there were 39 stalled developments in the City involving up to 7,500 separate apartments. Some of those may be completed most will not.
Secondly, those in blocks that have been part completed or completed where original investors had had their investments scraped off by preferential creditors who have acquired the blocks or in some cases hotels, where the blocks need completing or where debts were so high that new money had to be brought in.
In this latter set of cases, and every block and development is different, the original developer or a developer that acquired the block as preferential creditors are contacting original investors to demand a reduction the value of their completed property to accrue profit to that developer.
In most cases this has meant not only is all or part of the original capital been lost but so has the lucrative guarantees of income which have not been lived up to.
You may think that this is political hyperbole from a local politician but you should be aware of two enquiries into this matter:
Firstly, The Police launched ‘Operation Aloft’ into the work of the regeneration department of the Council and those preferred developers it was working with. So far 12 arrests have been made have been made of politicians, developers, contractors and staff although I would stress that none have yet been charged. This operation is ongoing.
Secondly, a Government Inspection Team led by Max Caller, has been put into the Council on the instructions of The Secretary of State at MHCLG. This inspection is looking in fine detail into the work of the Council’s regeneration department over the past decade.
However, it seems quite likely that a low estimate of the amount of money that has gone missing, been misapplied, lost or wasted would be between £1 billion and £2billion in Liverpool alone.
Clearly, there is interaction between the two enquiries. Liverpool is without a doubt the epicentre of this activity but reports from the Panorama Programme, Granada, BBC North West, Guardian, Times and Daily Mail have shown that this is a problem nationwide.
It has occurred because of a lack of regulation over this work from a number of bodies:
- Solicitors, recommended by the Developer have acted for both side of the purchase
- Surveyors have provided artificially high values
- Estate Agents, especially London based ones, have misled buyers about the Market
- Developers have moved money from one scheme toa another is a clear Ponzi style set of actions in which the first buyers get something and the last buyers lose the lot!
The Council wittingly or unwittingly have given credence to the market especially in the Far East where Governments such as Singapore and Hong Kong have looked askance at the money lost to their citizens by ‘Liverpool Investments.’
My belief is that as these developments have been sold for investment and in many cases recommended as investments for old age they need to be regulated.
People need to be able to have confidence that when they invest in a development there has been official oversight of the way that the development has been planned and carried out.
So, I am now asking the Financial Conduct Authority to step up to the crease and look urgently into ways these types of trading activities can be regulated. The view pertains in many parts of the world and indeed in this Country that the UK is an honourable place to do business. Regrettably, many people now know differently!
The Government should look I to great detail about the way that false promises about investment opportunities are causing global concern about UK investment generally with different types of problems emerging in parts of central London where property values are declining faster anywhere else in the UK.
I am hoping to persuade MPs and Peers to establish an All Party Parliamentary Group to look at these issues and for the relevant Select Committees to look again at what has happened, especially as the two afore mention investigations come to fruition and begin to give hard facts about what has and is happening in Liverpool and elsewhere.
I would of course be pleased to give further information to you in support of this suggestion.
Thousands of people globally have lost money because of a variety of property-based scams. It is now time to act on what has happened, bring the guilty to justice and to ensure that this type of behaviour cannot be repeated.
I look forward to hearing from you that you intend to take up this issue with the vigour that I believe is necessary.
Cllr Richard Kemp CBE
Lib Dem Leader,
Liverpool City Council