Tan Kin Lian's Blog: Avoid all land banking products

Sunday, April 11, 2010

Avoid all land banking products

Dear Mr Tan,
I really hope to get a reply from you as I respect your experience in many areas.

There is a Singapore company called X and they sells plots of land in UK. We are genuine investor and like to have your advice if you heard about them and whether there is any issue on reputation or scam which we should be aware of. There will be risk as we understand but it is a scam, we should be to think carefully.

REPLY
You should avoid all land banking schemes It is not worth the risk. You cannot make a judgement of their reputation or rely on it.

There is a chapter in my book, Practical Guide on Financial Planning, that deal with unregulated products such as land banking and other get rick quick schemes. You can buy the book ($12) here.

5 comments:

Anonymous said...: Thanks for the advise Mr Tan. But surprisingly a few Licensed Financial Adviser firms are selling these products. Are the products regulated and why MAS allows them to sell?? MAS should investigate into these companies and black list them if the product is not suitable for investors; April 12, 2010 6:00 AM
Anonymous said...: Does the product comes with Insurance & Title Deed? If not back off.

It is a pity we cannot name the company but some initials like PP or PG or WIG or EP tells alot rather than company X.

Some blogs rate landbanking is a scam with the names of such company being exposed too.; April 12, 2010 8:38 AM
Anonymous said...: Mr Tan,

Making investments is about taking risk-return positions. It is one thing to say a particular investment like landbanking is high risk, which it is, and another to say it is a scam, which has to be proven specifically and not generically as is being done in your blog. Unless evidenced, your broad-brushing of landbanking is alarmist and doing a disservice to existing investors and a threat to the value of their investments. Surely this is not your intent but you should be aware that your comment is a double-edge sword. It is also an imbalance to caution potential investors of high risk without referencing to high returns. Risk-taking is after all personal to each investor.
Much has been referred to Profitable Plots landbanking. Please share your take on this investment in respect of your warning of landbankig. If the practice is indeed fraudulent, it is surprising that MAS or some public entity has not taken actions or at least isue a public warning.; April 12, 2010 10:52 AM
Steve said...: Title deed is a very basic requirement. Insurance is meaningless to investment value.

What is liquidation value of land?
What are chances of planning permission occuring?

I've looked at 3 land banking companies offering uk plots over the last 3 years. One has failed and their land plots were being resold on eBay for less than 4% of their purchase price . For the other two companies one has had several uk press articles pointing out that their land is worthless and has no chance of planning permission. For the other contact with the uk local authority where their land is reveals that it has no chance of planning permission. Checking with the uk land registry reveals that the land they offer was purchased for less than 3% of current sale price.

That is research that you can do with a few google searches, emails, phone calls or letters.; April 12, 2010 11:34 AM
Anonymous said...: This is an example on how commission is paid as too what I understand:

Quote:

Minimum investment is abt 10k and the consultant get 4% cut from the sale.. The manager gets abt 2% cut overriding the agent and 6% cut from own sales and etc...; April 12, 2010 7:02 PM