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| Tips regarding buying property in Australia |
| 4. Beware property investment seminar fraud (September 2003) |
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The NSW Police says it is seeing a marked increase in off-the-plan property investment fraud with developers improperly using deposits to fund land purchases and construction. In some cases, building never begins and depositors' funds disappear. Then the developer and building companies go into liquidation and depositors will never get their money back. Meanwhile, Queensland has some of the toughest laws in Australia to protect investors from property marketing scams but industry observers in the state say fraud is still rife and investors continue to fall for them in large numbers. The housing boom has brought an array of spruikers to the property seminar business, all with similar methods. Promoting their service under an "educational" guise, they often advertise free seminars but then demand high fees for further instruction. They will also earn lucrative commissions as agents for property developers whose projects they ultimately recommend, and collect again from a stake in the loans offered to investors to finance their purchases. The Australian Securities & Investments Securities warns anyone going along to a seminar believing they are getting advice that it is often a product push they receive. The investment "secrets" offered can involve buying multiple properties at once, often apartments off the plan. This often requires a heavy borrowing commitment and inflated prices. There is also an emphasis on deposit bonds which remove the need to stump up a full deposit until settlement. Sharper operators advise selling one or all of the property assets before settlement for a quick profit or to fund further investment. Macquarie Bank has published a guide on how to avoid risking money in fraudulent property schemes - "Plain English Dos and Don'ts for Property Investment". A spokeswoman for Macquarie said that people often buy Gold Coast properties off the plan and the developments sometimes don't exist - and the scam is continuing. We can't repeat the message often enough, she said. In 2002 five Queensland test cases saw victims awarded $100,000 each but the state's Government is considering putting a limit on payouts. There are hundreds of property scam victims waiting to be processed, with the Department of Fair Trading having to put on extra staff to cope with the claims. This article last reviewed and updated: 11 September 2003
[source: news.com.au] |
