Myth-busting – Electrical Safety installations Act 202011:19 AM, 3rd August 2020
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Buy to let property clubs that rip off landlords are blamed for rising rental home repossessions.
The clubs ran relentless marketing campaigns during the peak of the housing bubble aimed at persuading property investors to part with their cash on homes advertising rent returns and valuations that were close to fraudulent.
Since the credit crunch, many landlords who bought in to these clubs are finding rental yields were inflated and that the income is short of covering the mortgage and running costs.
The Council of Mortgage Lenders, the trade voice for the UK’s bank and building societies, has disclosed that repossessions are up in the second quarter of 2011 – to 1,900 buy to lets from 1,700 in the first three months of the year.
The Association of Residential Letting Agents (ARLA) claims property investment firms played a large part in selling the homes that are failing to pay their way.
Operations manager Ian Potter said: “We regularly hear of buy-to-let repossessions and arrears cases arising from rogue clubs and the problem could get worse if we see a prolonged period of economic strife.”
One of the leading property investment firms was the now collapsed Inside Track. Inside Track invited property investors to seminars teaching how to get rich quick through buy to let.
The strategy involved buying letting properties from sister company Instant Access Properties.
Most were off-plan flats in city centre developments where pricing involved massaging the property values and rent expectations to gain ‘no money down’ mortgages.
Many would-be landlords were unable to rent their flats for anywhere near the expected return and found they could not sell because of the credit crunch, leaving them with significant debts and financial problems.
Investors claiming Inside Track and Instant Access Properties are gathering evidence to launch a legal challenge against the firm’s directors with the aim of claiming compensation for their losses.
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