Speaking on the BBC programme, The Truth About Property, one victim told how he had been pressured to make a decision on whether to buy or not, and had lost thousands in fees along the way.
Choosing to remain anonymous, the buyer said: “When the properties are given to you, they are given to all of the members at the same time, so the actual time given to you to make a choice is short – about half an hour – and you don’t know how many members of that club there are. You need to make a decision on buying a property at about £150,000-£200,000 within half an hour so you have to be able to trust their guidance.”
It was claimed that properties being offered were overvalued in both purchase price and rental calculations. With buyers facing a finder’s fee of 2.5 per cent on each property they bought, as well as legal and deposit fees on top of the purchase price, this has apparently led the buyer into the trap of negative equity.
Elsewhere it was claimed that properties offered to members were often overvalued and after members had paid fees to join the club, they had made an investment of around £50,000-60,000, but members were reportedly getting a third less in rental yield than they needed to make the mortgage repayment.
Regional seminars offered by the investment clubs were also slammed for providing little aid to interested parties. Which? spokesperson, Teresa Fritz, said: “Seminars such as these are overpriced and offer customers little information that they could not already find for free on the internet or from organisations such as the Association of Residential Letting Agents.”
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