PEOPLE


26 | BUSINESS The legal view WORDS | John Howell


www.opp.org.uk | JUNE 2010


John Howell 020 7836 2841 john@jhco.org


his month, even more than usual, I have been inundated with ‘opportunities’ highlighting the best – and worst – of the international property industry. At the same time, my discussions with developers and agents around the world have shown a widening gap between those genuinely optimistic about their future and those who (when they know you well enough to admit it) confess to sinking ever deeper into despair and whose only agenda is survival. At fi rst, I thought that the two would be related – the best opportunities coming from the areas with the best prospects and vice versa. But this is not true. Some of the worst examples of bad practice have come from places where genuine opportunities abound and some of the best opportunities exist in places where agents and developers are despairing most.


Howell on... opportunity ... and danger T


Bargains where the numbers stand up to scrutiny and the risk element is entirely acceptable to the clients concerned.


What is the common thread? It is serious people making serious, reasoned and sensible decisions about their future. Yet, every day, my inbox is full of increasingly dodgy offers, often (but, sadly, not always), from companies I have never heard of. These offers make the most outrageous claims. “Guaranteed 50% per annum return on investment”, “20% Below Market Value”, “The ONLY SIPP eligible property in X”, etc. All of these are, almost certainly, untrue. None of them are backed up. Almost none of


So, what are the real opportunities? The number of people planning near-term retirement overseas is well up. So is the number starting the process of emigration, especially to EU countries, Turkey, Canada, Australia, New Zealand and the US. This is bad for our country but a great opportunity for those in the industry – provided that they can provide the service, the property and the services these people need.


The number of people with a serious interest in property investment also seems to be on the rise. Those I speak to are looking, in the main, for safe, lower risk and medium term investments in established markets. France, Spain, the US, Brazil & Germany, not Romania, Bulgaria or Belarus. There are plentiful and genuine bargains in these places.


“People are more and more likely to be sued when it turns out that the claims are untrue”


the “Guaranteed Returns” are, in fact, guaranteed. In fact, most are highly improbable. “20% below market value” is an expression due to be challenged in the UK courts and I very much doubt whether it will stand up to scrutiny. Almost all properties can be SIPP eligible. All of these claims are likely to lead the people making them into trouble. In an ever more litigious society, they are more and more likely to be sued when it turns out that the claims are untrue. If the person or company making the claims is the member of a professional body (such as AIPP) they may well be expelled. The directors of any company making the claims could face a demand that they be held personally responsible


for any intentionally or recklessly untrue statements. Directors may also fi nd themselves investigated and either prosecuted or fi ned by the police, the FSA or regulatory bodies such as the Companies Investigation Branch (CIB) of the Department for Business, Enterprise & Regulatory Reform. They have wide powers of investigation and they are not afraid to use them. Typically, investigations commence with an unannounced visit by the investigator – a “dawn raid”.


Is this scaremongering? I don’t think so. Desperate people who have lost their life’s savings will take any action necessary to protect their position. Remember, we live in a world of ‘no win, no fee’. What do they lose by suing?


So why do so many of these offers arrive on my desk? Obviously, the people sending out the emails think that they will make sales. They may or may not be right. But what is striking is that many of these offers relate to places where there are genuine and attractive opportunities which they could sell if they took the time to do their research. Which takes me to my fi nal point.


If you are serious about working in the fi eld of overseas property you need to know your markets. You may not need to be an expert in each of them but you must have, at least, a good working knowledge of what is happening in them. The more you know the more successful you are likely to be. If you want to advise people about property investment you must be able to assess opportunities and match them to the individuals who are consulting you. If you can’t tick both these boxes, perhaps it’s time you took some training or consultancy.


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