UK pensioners have once again been warned to take care before investing their hard-earned life and pension savings in property, after a BBC investigation discovered an estimated £600 million had been ‘invested’ in a German building firm.
The builders claimed to be redeveloping derelict listed buildings in prime locations in Germany, by transforming them into luxury flats. Some of the properties had fallen into disrepair after the fall of the Berlin Wall, 30 years ago, having been abandoned when people moved to the west. The German government offers tax incentives to Germans redeveloping listed properties.
The German Property Group (GPG), previously known as Dolphin Trust, employed various companies to tempt the pension savers into making an investment. The companies promised investors it would double their money if they lent their savings to Dolphin Trust for five years, saying that the investment would be secured by a legal charge against the property. The salesmen were often unregulated and at the time received 20% commission.
The five year deadline for at least two of the investors interviewed by the BBC, who had invested £16,000 and £35,000 respectively, has now gone by but there has been no sign of a return in their investment or the expected profits.
The investors told investigators that they had not received paperwork or evidence of a legal charge, other than a brief document that resembled a building catalogue. Of 60 properties listed, one was finished and another was close to completion but despite being owned by the company for over five years, and no work had been carried out on any of the other properties.
The local mayor of one rural village laughed at the suggestion of any demand for luxury flats in his area, but GPG had purchased the monastery with the intention of developing the building. He said that the company had not visited the property prior to its purchase but he had had communication from them a year before. The proposed redevelopment was not on hold.
The UK is not the only country being targeted and investors in Singapore said they had invested in a Nazi military barracks in Mannheim, Germany. However, the German government contradicted this, saying it wholly owned the site and no private money had been invested.
In its response, GPG reassured investors, saying that their money was secured against property on the German Land Register. It also said that it was under no legal obligation to tell investors when the funds were reallocated to develop properties other than those in which they had invested. The company said there were delays in the redevelopment of ten of the properties but that those investing in the other fifty properties would receive their promised money on time.
If you’re investing in property, make sure a Chartered Surveyor carries out a survey of the building to help you safeguard your investment.