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- A guide to the information we keep and how you can obtain it (Public Guide 1)
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- Protecting home rights under the Family Law Act 1996 (Public Guide 4)
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- Registering title to land – the characteristics and advantages (Public Guide 8)
- What to do when a land owner dies (Public Guide 9)
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- Applications for first registration made by the owner in person (Public Guide 13)
- The sale of "titles" and Land Registry (Public Guide 14)
- Your rights under the Freedom of Information Act 2000 (Public Guide 15)
- 'Free land and property'? Why you should beware adverts making such claims (Public Guide 16)
- How to safeguard against property fraud (Public Guide 17)
- Joint property ownership: the two kinds explained (Public Guide 18)
- Title plans and boundaries explained (Public Guide 19)
- Evidence of identity – non-conveyancers (Public Guide 20)
- Land banking schemes – warning – plots of land in England and Wales offered for sale claimed to have development or investment potential (Public Guide 21)
- Keeping your name in the register up to date (Public Guide 22)
- Applications by a creditor for a restriction to protect a charging order made by a court (Public Guide 23a)
- Application by a local authority for a restriction to protect a statutory charge arising under the Health and Social Services and Social Security Adjudications Act 1983 (Public Guide 23b)
- Applications by the Legal Aid Agency for a restriction to protect a statutory charge arising under the Legal Services Act 1988 or the Access to Justice Act 1999 (Public Guide 23c)
- Applications by a trustee in bankruptcy for a restriction to protect a bankruptcy order made against one of joint proprietors (Public Guide 23d)
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- Protect your property from fraud
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- Joint property ownership
Public Guide 21 – Land banking schemes – warning – plots of land in England and Wales offered for sale claimed to have development or investment potential
Updated: September 2012
This edition of the guide replaces the November 2011 edition. Section 4 has been updated to confirm that Land Registry may decline to approve a request to approve an estate plan or draft estate documents for unregulated land banking investment schemes.
What this guide covers
This guide is aimed at warning the public about 'land banking' investment schemes.
We have written this guide to warn you about 'land banking' investment schemes (where a landowner divides their land into many small plots to sell and they claim that the plots have good investment value, usually in the expectation of future development).
Many investors have been persuaded to pay thousands of pounds for land that has little or no chance of ever being developed. The Financial Conduct Authority estimates that land banking schemes have cost United Kingdom (UK) investors as much as £200 million. (The Financial Conduct Authority is the financial regulator for the UK. It is an independent organisation and has powers given to it under the Financial Services and Markets Act 2000 (FSMA).)
We at Land Registry do not provide advice about the investment or development potential of any particular scheme. We also cannot confirm whether or not land, or a particular transaction, is part of a land banking scheme or whether a scheme is suitable for future development.
If you are considering buying land for its investment potential, you should consult an independent professional adviser (see the Royal Institution of Chartered Surveyors (RICS) website www.rics.org and the Law Society website www.lawsociety.org.uk/choosingandusing/findasolictior.law).
We hope that by publishing this guide we will help to improve public awareness of the risks of investing in land banking schemes. The information in this guide is general. If you receive a copy of this guide or we refer you to it, you should not assume that we believe that any particular scheme is a poor investment or that the land within the scheme will be unsuitable for development.
2 What does Land Registry do?
We are responsible for maintaining the register of title (ownership rights) to land in England and Wales and for registering this land.
You can find information about Land Registry on our website at www.landregistry.gov.uk
In particular, you may want to take a look at the following guides on our website.
3 What is 'land banking' and how do these schemes work?
Land banking is the practice of buying undeveloped land with the aim of dividing it up into small plots and then selling them on to buyers at inflated prices. The plots are offered for sale to individual investors, sometimes with the claim that there will be huge returns if they get planning permission for housing or other development. The land is often in 'green belt' – farmland, parkland or open country protected from urban development by planning law – or it could be agricultural land where no development is ever likely to be allowed.
The plots may be offered for sale to buyers at home and abroad. The focus is on the potential future value of the land against the current selling price. Sellers will usually not mention the fact the land is protected and cannot be developed under current planning regulations. Even if the land does have development potential, dividing it into small plots held by different owners may make it less attractive for a company to buy if it wanted to develop the site.
4 What do I need to know about these schemes?
The seller could mislead you about the prospects of the land being developed, getting planning permission or redevelopment. This may then make you think you will have the opportunity to sell the plots, with planning permission, at a profit to developers. Many experts believe that these investments will never produce big returns.
Those operating land banking schemes often claim that they have well-known banks, other lending institutions and established developers as their partners when this is not the case.
Some people have also been led to believe that planning permission has already been granted.
In some extreme cases sellers have forged Land Registry documents to suggest that we have given official planning approval. In other cases the sellers have produced a letter showing Land Registry estate plan approval. Since September 2012 our policy has been to decline any request that we approve an estate plan or draft estate documents such as transfers or leases in suspected land banking schemes if we consider that granting approval may mislead members of the public into believing that future development is likely.
An approved estate plan can be used to form the basis of transfer or lease plans and help to register the land. But this is not planning permission for the site or plots. We have nothing to do with granting planning permission for development.
Often those operating these schemes say they will deal with registering the sale and provide the documents you need. In many cases people who invest in these schemes are less likely to get independent advice.
5 Are these schemes regulated?
'Land banking' is usually not regulated. This means that any money you invest is not protected if things go wrong. However, the UK's Department for Business, Innovation and Skills may be able to take action against the schemes under existing laws if you have been misled.
A land banking scheme that is a 'collective investment scheme' (see http://www.fsa.gov.uk/Pages/consumerinformation/scamsandswindles/investment_scams/land_banking/index.shtml) is a 'regulated activity' for the purposes of the FSMA and may only be operated in the UK by a person who is either authorised or exempt. A collective investment scheme may be operating where, for example, a land banking company keeps overall control of the site with a view to getting planning permission. Land banking companies often try to avoid their responsibilities under FSMA by producing brochures and literature saying that they will not apply for planning permission over the site and that it is for the investors to do so. Despite this, they often still confirm to investors, over the phone, that planning permission will be dealt with by the land banking company. This means that the scheme could still be covered by FSMA and that the FSA may be able to investigate.
A large number of UK companies offering UK land plots have failed or been shut down by the FSA or other authorities. Some companies have now moved offshore after being investigated by the FSA. Many companies selling UK land plots have moved outside of the European Union and only offer land plots to people who do not live in the UK as they are not protected by FSMA. Some companies now offer UK land plots from places such as Dubai or Singapore where the local authorities do not regulate these activities or are not aware of the high-risk nature of the investment.
If you need more information or if you want to report a scheme to the FSA, you can contact the FSA's Consumer Helpline whose contact details are set out in section 9 General information, or go to: www.fsa.gov.uk/Pages/consumerinformation/scamsandswindles/investment_scams/land_banking/index.shtml.
6 Do land banking schemes affect only customers in England and Wales?
These schemes have targeted members of the public at home and abroad who have been offered the opportunity to invest in land in England and Wales.
Many land banking companies target people outside of the UK, such as Singapore, Thailand and Malaysia. People who live in these countries may not be familiar with the UK property market and local planning regulations such as green belt. Sometimes those operating these schemes are based abroad.
7 What if the land is registered with Land Registry?
We have to register transfers of plots within land banking schemes if all the necessary legal formalities have been met for that transfer. We cannot refuse to process applications even if we suspect that the seller has been operating an illegal collective investment scheme or misrepresented the value of the land transferred.
If you are registered as owner of a plot within a land banking scheme, we recommend that you make sure that your own address is entered in the register rather than just an address which is 'care of the seller'. This will make sure that if we need to write to you, we send our letters to your address. For information about the 'address for service' see our Public Guide 2 – Keeping your address for service up to date.
8 What can I do?
If you are offered an opportunity to buy land for its investment value, you should question the information you are given and consider getting independent legal advice. The Law Society can give you details of the independent solicitors specialising in property law. Its online 'Find a solicitor' service helps you to search for property solicitors in your area. RICS can give you details of registered valuers.
We are not directly involved in land banking schemes and we are unable to take any steps to prevent these schemes. You have to decide whether to take part in one of these schemes.
We cannot help you if you have lost money on your investment and we cannot give you advice. We can give you advice on our procedures about how to apply to register any land you have bought.
If you think that you have been a victim of fraud, you should contact the police.
9 General information
You will be able to get more information about land banking from the following organisations.
Financial Services Authority
25 The North Colonnade
You can call the FSA's Consumer Helpline from Monday to Friday (but not bank holidays) from 8am to 6pm on the following numbers.
UK: 0845 606 1234
From outside the UK: +44 (0)20 7066 1000 (main switchboard)
Department for Business, Innovation and Skills
1 Victoria Street
You can get details of independent legal advisers from:
The Law Society
113 Chancery Lane
UK: 020 7242 1222
From outside the UK: +44 (0)20 7242 1222
You can get details of valuers from:
Royal Institution of Chartered Surveyors
UK: 0870 333 1600
From outside the UK: +44 (0)870 333 1600