Landlord Action has recently reported that its debt recovery department has never been busier due to pursuing rogue property sourcing and investment companies.

Worryingly there are an increasing number of companies who have been asking for upfront fees to source below market value deals and marketing property deals that, once surveyed for mortgage purposes, are figures far short of the original claim. Companies then refuse to refund fees so investors employ the services of Landlord Action to help recover their monies.

Paul Shamplina, director of Landlord Action, said: “As the market climate has changed some companies are struggling financially and are using investor deposits to fund their business operations rather than holding funds on deposits to be returned if deals do not happen. Therefore, we are seeing an increase in the number of instructions for individuals and companies who it seems have been ripping off investors by supplying ‘bogus discount deals’. The industry needs to be governed to include a code of conduct in regards to these companies, working closely with the FSA.

“These rogue sourcing companies are often unwilling to release many details on the property so investors need to research themselves into the property values, rental prices and the level of demand in the area. As well as this I would highly recommend that investors research the sourcing company itself via its trading record and look at its auditing history. Also, although not guaranteed, listen to other investor’s recommendations. There is a good chance the company is reputable if others have received a good level of service. My final advice, when going through with a deal, is to double check the terms and conditions and keep in regular contact with the company in question.”

Editors note: This has been covered in more detail on Page 27 of the latest edition of Property Investor News™