Undeveloped land is always a good investment, right? It is secure and certain to increase in value once developed. What could possibly go wrong?

Unfortunately, this common misconception has led to many an unwitting investor being targeted by a property fraud known as “land banking”. This fraud is designed to persuade the victim to invest in a piece of land that is far less valuable than they believe it to be.

How land banking works

Imagine the scenario, you are contacted out of the blue by a company claiming to have an “unmissable investment opportunity”. They tell you about a prime piece of land that they own and invite you to invest in a plot. Once planning permission is granted and the plot is developed your profits will soar. They produce impressive brochures and direct you to a professional looking website.

Having gained your confidence, you decide to invest your life savings. You figure that land is always safe. It will always increase in value.

However, what they didn’t tell you is that the land is within an area of natural beauty. There is no chance that planning permission will be granted and it probably won’t even be applied for.

Your plot is worthless and it may be years before you realise that you have been defrauded out of your life savings.

What can you do?

To reduce your risk of being a victim there are a number of simple steps you can take:

  1. Reject unsolicited calls and emails; legitimate companies should never contact you out of the blue.
  2. Always instruct your own solicitor prior to investing in land (they can carry out due-diligence against the plot of land that you intend to invest in).
  3. Research the company and investment online (there may already be disgruntled investors out there).