Landlords & Tenants Avoid Scam Rental & Let Agents

SafeAgent Logo

SafeAgent Logo

Both landlords and tenants are at risk from lettings agents and estate agents who disappear with rent and deposit money. A kitemark-style scheme has been launched to reassure tenants and landlords worried about losing money handed over.

Agents displaying the SAFEagent mark will already belong to a client money protection scheme operated by the National Approved Letting Scheme, the Association of Residential Letting Agents, the National Association of Estate Agents and the Royal Institution of Chartered Surveyors. These pay out in the event of the agent going bust or misappropriating money that has been handed over as a deposit or rent.

The scheme is backed by organisations including housing charity Shelter, the NUS,  the Trading Standards Institute, the Residential Landlords Association and the British Property Federation.

In practice landlords are more at risk from rogue agents than tenants – tenants need to ensure their money goes to the genuine owner of the property that they are going to live in, Landlords need to ensure that the business handling their money is protecting it in a client account rather than using it to fund their own activities.

Pimlico Mortgage Fraud

Joanne Pier/Zoe Fletcher

Joanne Pier/Zoe Fletcher

During 2007 & 2008 someone claiming to be Joanne Pier/Zoe Fletcher claimed that her father had made money in property and the diamond trade, and that her grandfather had built South Africa’s Sun City development – she approached Ashdown Lyons Chartered Surveyors asking for valuations on a large number of residential properties including Belvedere House, Pimlico.

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The Accused

The Accused

Mary-Jane Rathie, a senior surveyor at Ashdown Lyons, allegedly overvalued these top London properties in return for £900,000 plus a Bentley Continental and a Range Rover Sport, together worth nearly £200,000 which were both registered in the name of her husband David, 47, a Metropolitan Police officer with the central London traffic unit.

Ms Pier obtained more than £10 million of loans, based on valuations by Rathie, and has since left the country and cannot be found.

In February 2009 Ashdown Lyons was placed into adminstration with all staff made redundant, in total 60 staff lost their jobs, 35 surveyors and 25 administrative staff.

What lessons do you think we can draw from this sad & sorry tale?

Landlord Karma

Karma in Indian religions is the concept of “action” or “deed”, understood as that which causes the entire cycle of cause and effect, originating in ancient India and treated in Hindu, Jain, Buddhist and Sikh philosophies. In Indian beliefs, the karmic effects of all deeds are viewed as actively shaping past, present, and future experiences. The results or ‘fruits’ of actions are called karma-phala. In Western thought processes Karma can be expressed as “What goes around comes around”, and also as a natural balance of the Universe. Melissa Cohen – when being fired from The Apprentice – hissed that her competitors would get their comeuppance “when the balance of the Universe was restored”.

Phil Martin

Phil Martin

The online property world is currently buzzing with the closure of the Property Forum Singing Pig, Liquidation of the Portfolio Building Company  Rapid Property, and the Bankruptcy of their owner Phil Martin. Several who have met Phil have spoken up in his defence, saying what a nice guy he is. Others have countered that by saying that successful scammers have to appear nice for their scams to work. There seem to be many who paid five figure sums in advance for Rapid Property’s services, only to lose their money, and they quite naturally are outraged and distraught.

There are others who operate similar businesses to Rapid Property – some or all of:

  • sourcing property,
  • arranging mortgages,
  • setting up legal contracts,
  • conveyancing,
  • managing property portfolios,

All currently trading in this area are very keen to demonstrate the difference between how they operate, and how Rapid Property ran it’s business.

For those unfamiliar with the concept of Portfolio Building the concept is as follows:

A Portfolio Building Company sources “BMV” Properties. BMV stands for Below Market Value, and most often the property is acquired below what it is worth because it is owned by a “Motivated Seller” – an industry euphemism for someone who is desperate. Typical motivations can be:

  • Divorce.
  • Illness.
  • Suicide in the Property making it unlivable for the survivors.
  • Redundancy
  • Financial Crisis
  • The property was inherited and they want nothing to do with it.
  • Owners are ill, in poor health, elderly, retired or disabled.

Having acquired a property for less than it is worth, it can be Mortgaged for it’s full value, with the intention that the Investor can now withdraw the deposit that they used to buy the house, and use it to repeat the process. Rapid Property offered to build a portfolio of £1,000,000 worth of houses for a down payment of £50,000. The houses would of course be mortgaged, and the interest on the mortgages would need to be covered from renting the properties.

Some would consider that building a property portfolio based on the misfortune of others was morally unsound. Others would argue that the BMV purchaser isn’t the cause of the misfortune, but part of the solution of the problem.

Muchilottu Bhagavathy Theyyam

Image by freebird (bobinson|??????????) via Flickr

Regardless of your view it is clear to me that people paying money in advance to Rapid Property were driven by a greed for riches which would fall easily into their lap. As always some will call for such people to be protected from themselves, and their own folly and greed. Others will say that we are all adults in a dog eat dog world, and people should be allowed to make their own mistakes. There may even be a view that the investors should lose their money, as a retribution for seeking to profit from other people’s unhappiness.

Has the balance of the Universe been restored? What is your view?

The Telephone Number that Screams Fraud

A landline telephone

Image via Wikipedia

Another scam website and the give away is the phone number. It’s one of the mobile 070 numbers, disguised by adding the international dialling code. Remember +44 (70x) is the same as + 44 (0) 70x is the same as the danger number 070x – calls made to 070 numbers are anonymously transferred, and to rub salt in the wound – the caller pays the charges for the transfer!

These mobile-style personal numbers (beginning 070) give you fantastic flexibility for your business at no cost. 07-K numbers include free call forwarding to UK mobiles, UK landlines and landlines in over 180 overseas countries. This flexibility ensures that they are a perfect additional tool for roaming business people or employees ‘away from base’ – as well as for staff back at the main office. Customers dialling from the UK will have their calls diverted automatically at no cost to you.

Always ask for a fixed landline number or at least a UK mobile number if you are looking for a genuine transaction.

In the case of Liberty Home Services

He sucked me 500 pounds two weeks ago requesting me to make a money transfer onto the current account of person named Paula Campbell (indicated by him as the owner of flat I intended to rent); the current account is based in the UK on the Camberwell Branch of Barclay Bank.

A shame the writer hadn’t seen our warning

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Property Investment Scam – Valuer Pays the Price

The High Court

The High Court

In an interesting legal development:

a surveyor has been successfully sued for an inaccurate valuation of the rental value of a property. Whilst the case has hit the news because it is the first time that a valuer has been held to account for their report of the rental value of a property, the case also neatly illustrates everything that is rotten about the world of property investment, where the naive are separated from their savings on a regular basis. As is usual in all scams greed is a motivator used by the scammers to encourage normally sensible people to make rash decisions.

The Basic Rules of Scams Apply

  • If it seems to good to be true then ….. it is too good to be true.
  • If someone assiduously phones, meets, presents to you with energy and drive ….. that’s because they are going to make more money out of what they are selling you than you are
  • If they have a guaranteed scheme ….. why are they selling it? Why aren’t they using it?
  • Don’t have the scammers pay for the professional advice for you, pay for your own.

If you want to learn about property investing, then everything that there is to know is available free of charge from existing investors on the internet. Definitely avoid anyone selling seminars, services, or mentoring!

Landlord wins buy-to-let case against surveyor

A buy-to-let landlord has won a long-running legal case against a surveyor judged to have overestimated the rental income on a new-build flat, paving the way for future challenges from other aggrieved investors.

Emmett Scullion, a self-employed builder from Portsmouth, bought an apartment in Cobham, Surrey, to augment his pension. The property was valued at its asking price of £352,950 in a valuation by local surveying firm Colleys, now part of Lloyds Bank. The survey said the flat could be let for £2,000 a month.

Scullion bought the apartment in 2002, based on the figures given in the valuation, but found he could let it only at about 50% of the surveyor’s estimate. He sold the property in 2006 at a loss, a full year before the downturn in the housing market.

He subsequently took legal action against Colleys, claiming the surveyor owed him a duty of care, and was awarded £72,000 this month. The damages cover his loss of rental income and the transaction costs of purchasing and then selling the flat.

Reported by The Observer two weekends ago

As a precedent the case is interesting, but the case has other features which are just as interesting, not because they are unique, but because they are stereotypical. The case was heard in the High Court on 6 September 2010. The buyer had signed up with Portfolios of Distinction and been sold a service to build a property portfolio of up to £1 million for a £50,000 annual fee. Money from investors was clubbed together to buy new properties from developers off-plan, before the buildings were complete, enabling them to buy at a discount. I suspect that the sale lead came from Turningpoint Seminars, a firm linked to Portfolios of Distinction, who specialised in seminars on property investment charging £6,000 for courses for prospective investors, teaching them how to acquire buy to let properties without payment of a deposit. At a later date the Department of Trade and Industry alleged that Portfolios of Distinction was carrying out its business in a way that was “inherently objectionable” and closed them and Turningpoint Seminars down.

‘When you invest with Portfolios of Distinction you can be assured that your investment is in safe hands. The company is renowned for its innovation, bringing new property purchasing concepts to the UK and for its established track record in successfully building high worth portfolios for its clients. We are a highly knowledgeable team, who are also property investors ourselves with many years of experience. An expert team that you can rely on to build you a £1m plus property portfolio’.

‘Portfolios of Distinction offer the best managed property scheme in the UK today. We are genuinely different. We build wealth creating property portfolios using our unique and proven ‘no deposit approach’ which can provide outstanding returns’.

What an investor needs to understand when signing up to a packager like Portfolios of Distinction, is that they will be sold a package which will be implemented by a team (Broker, Solicitor, Valuer) whose job is to process these deals for the packager successfully. They do NOT look after the interests of the patsy  investor, they are paid by the packager to achieve a successful deal with the investor patsy.

The patsy signs up for the package on the basis that he doesn’t have to provide any money ever. They buy the property, but don’t need to pay a deposit because the valuer gives the property a valuation of more than it is worth. The bank lends the purchase price happily because credit is cheap and they make good money on the loan which is secure because house prices always rise. The patsy doesn’t need to worry about paying mortgage interest because the rent will cover the mortgage. In fact the pact with the devil does sometimes work for some people.

In this particular case things went wrong because the valuer had to uprate the rental valuation in order for the rental to cover the mortgage, and when the patsy finally realised that he was going to have to make a contribution towards the mortgage interest the solicitor didn’t tell him that he wasn’t obliged to proceed. Because he now wasn’t able to afford the cashflow for the flat he was forced to sell it at a loss.

Distilled down the court judgement means that the valuers have to pay the patsy for the difference between their rent valuation (£2000 pcm), and the rent achieved (£1050 pcm). They also have to pay some of the fees that the patsy incurred, but not all because he didn’t claim them in time. An important part of the judgement is that the valuer isn’t liable for the market loss that the patsy incurred. The argument is illustrated as follows:

A mountaineer about to undertake a difficult climb is concerned about the fitness of his knee. He goes to a doctor who negligently makes a superficial examination and pronounces the knee fit. The climber goes on the expedition, which he would not have undertaken if the doctor had told him the true state of his knee. He suffers an injury which is an entirely foreseeable consequence of mountaineering but has nothing to do with his knee.

The doctor is not liable. The injury has not been caused by the doctor’s bad advice because it would have occurred even if the advice had been correct

The part which I suspect that the court has neatly sidestepped is that the patsy should not have made a market loss, during the period that they held the property (2002 – 2006) house prices in general rose 50%. In spite of that the figures for this particular investment are:

Valuation 2002 £353,000

Purchase Price 2002 £300,000

Sale Price 2006 £270,000

Please tell me what is going on!

I final thought for anyone considering litigation, this case very neatly illustrates that the only winners in court cases are lawyers. The Plaintiff won £72,000 damages plus his costs – his costs are actually £187,000 but he will only get costs taxed at the standard rate from the Defendant. He’s definitely got £100,000 already but I suspect that most of his damages will end up paying his legal bill.  He would have been financially better off not bringing the case!

But sometimes it not what it costs that counts, it’s the principle isn’t it?

See a Rent London Flats Scam in Action

Scam Studios

Although I have written about this scam before, the websites seem to be up and running again so I thought that I would show you some scamming websites in operation, how professional they can look, and the signs which give them away. You can also see for yourself the mechanism by which the scammers set up their traps.

The sites feature descriptions and photographs of real flats which have been stolen off genuine websites, and then put together in an impressive looking fiction. They target people who won’t be viewing the flat – the serviced apartment market.

Advertisements are run, most typically on a free to advertise directory, which direct enquiries to the website which has been established to present the non-existent flats.

Two such websites are:

Scammers Website 1

Scammers Website 2

You can look up the details of the owners of websites on the internet  Scammer 1 Scammer 2 , and hence I was able to establish that unsurprisingly these two websites are in fact owned by the same person, and that this person owns 19 domains (sadly I have to spend $559.92 to find them out).

There is no doubt that the owner of these websites has given false information to the website host, they have been registered by:

Abraham Isaac
31 Queen Anne Street Marylebone
London, London W1G 9DL

Whereas there is actually a Doctor’s surgery at that address:

Dr. Leonard M Selby
31 Queen Anne Street

The phone number given on the website starts 070 ( 07023089852 ) – calls made to 070 numbers are anonymously transferred, and to rub salt in the wound – the caller pays the charges for the transfer!

These mobile-style personal numbers (beginning 070) give you fantastic flexibility for your business at no cost. 07-K numbers include free call forwarding to UK mobiles, UK landlines and landlines in over 180 overseas countries. This flexibility ensures that they are a perfect additional tool for roaming business people or employees ‘away from base’ – as well as for staff back at the main office. Customers dialling from the UK will have their calls diverted automatically at no cost to you.

Always ask for a fixed landline number or at least a UK mobile number if you are looking for a genuine transaction.

If you phone the scammer’s number or reply to their Ad. they will claim to be

Mr A. Rosso

Great British Homes

963 Fulham Rd London SW6 5JJ
Tel: +44 702 406 8625

It’s a clever address to give as there did used to be a genuine property company at that address once but as can be seen from Streetview, they have vacated the premises .

So there you have a genuine scam in operation.

  • Scam Properties are a Bargain. If it seems too good to be true – it is.
  • Only deal with established businesses. Check out the address. Look for a working Landline Number, if there is only a number forwarding phone number move on.
  • If it’s a business it won’t be advertising using free ads on Gumtree, Craigslist, et al
  • Only pay by a reversible method (Credit Card, Paypal).
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July 2015


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