Investment Gone Wrong.

channelglasses

I invested all my savings of £30K into an arrangement 2 years ago. It was with a local business man who runs an estate agents. He is quite well known to be a genuine person (or so I thought!) and I had some money lying around so I asked about investments and he told me about one particular option available.

He buys a house. I put in £30K. He pays the rest. I get £300 a month back from the rent, he keeps the rest. After 24 months, the investment ends and I get my £30K back.

The agreement states that if the £300 a month is not paid to me for 6 months, I can end the contract. Also, it states that if the £30K is not returned to me after the 24 months, the property would be sold or I could take charge until it sells. I got it all checked over by a solicitor and he said it seemed OK but there was an element of risk with it. He also had his solicitor involved.

The monthly payments all came through for the first few months and then there were delays creeping in. It got to 5 months behind with the payments about 6 months ago and I said I was looking to end the contract, so he coughed up.

Anyway, the investment is up now as 24 months have passed. 6 months money is owed to me and he is now saying the property was damaged and he is going to refurbish it and then sell it. He says he can't say how long it will take before it sells which is understandable but I am getting more and more concerned as each day goes by.

What do I do now? Do I need to go to a solicitor or a laywer? Is there any chance I can get my money back or have I been done over?

I have learnt my lesson and will never think about doing anything like this again. I feel like a complete dipstick now. I really hope I will get the £30K back. I am not overly bothered about the 6 months money as long as I get the investment amount back.

I've paid tax on the first 12 months money I received when I did my tax return. I am going to do my tax return for the next months soon. If I only get money for 6 months and not the other 6, do I still have to pay tax on the full 12 months money?

Random47

What do I do now? Do I need to go to a solicitor or a laywer? Is there any chance I can get my money back or have I been done over?


You should really post this on a legal advice forum or return to the solicitor you originally used when deciding to invest in this rather informal and unregulated method. Though thanks for your post as way of reminder of what can go wrong in these circumstances.

gadgetmind

channelglasses wrote: »

if the £30K is not returned to me after the 24 months, the property would be sold or I could take charge until it sells.

Work with your solicitor to get that charge in place. Even if this doesn't get done in time, and he sells with this agreement in place, then the buyer could also take action against him as he can't declare clean title.

Perhaps you can also get the rent you're owed added to the charge?

If I only get money for 6 months and not the other 6, do I still have to pay tax on the full 12 months money?

You only pay tax on what you've received.

atush

File a complaint with your solicitor.

Carry forwards with the regulatory body if you dont get a good reply.

and next time, look to a regulated investment for your money. This investment was very unwise even from the outset as it seems you dont have any legal standing?.

Archi_Bald

Agree with gadgetmind's comments.

As you say you have a legally valid and binding agreement, and since there is an asset, it can only be a matter of time until you get your money back. It does involve some hassle by the sounds of it, and it's understandable that you don't want to do something like this again, but your risk is more or less non-existent. You made a lovely 9% p.a. before tax so far, with more to come. You couldn't have got anything like that in any other low-risk investment.

Talk to your solicitor, and get familiar with the Small Claims Court / MoneyClaim Online options that are at your disposal.

Mistermeaner

Impossible to comment meaningfully without reading the contract, go see the same solicitor again

Glen_Clark

ggb1979 wrote: »

Impossible to comment meaningfully without reading the contract, go see the same solicitor again

I'm afraid I have to agree with that - after seeing all those Dragons Den programmes when someone says 'I've got a contract' and one of the Dragons reads it and tears it to shreds because its never what they say it was. Much as I dislike paying solicitors I feel you have to go back to your solicitor for advice. Or perhaps you have and you didn't like his answer

DesG

Why on earth would you invest without a charge in place at the start?

gadgetmind

And why didn't the solicitor advise that a charge would be *very* wise. It's the difference between a secured and an unsecured loan!

Bluebirdman_of_Alcathays

Jeez.

File a complaint with your solicitor, and then once 8 weeks are up file one with the legal ombudsman. I am astounded that a solicitor would advise a client to proceed without a charge on the property.

Snakey

I assume the 12% interest rate was set precisely because the loan needed to be unsecured (presumably the OP essentially provided the deposit and the rest was mortgage finance, while our wheeler-dealer type takes no financial risk, puts up no money, charges rent to cover the mortgage and loan and takes a profit on the eventual sale).

There's no particular reason to suspect it's dodgy - by which I mean no more reason than there was on the day he signed it - but I think the OP has been lucky with his timing, if the property market has gone down it might have been a different story about getting his money back. I would be reluctant to push for a forced sale because the bank will be paid back first and there may not be enough left over for the OP - if it were me, I think I'd prefer it to be refurbished first since that's not costing me anything but it is making my return of capital more likely.

OP, if you do this again, put something in the contract whereby a nice hefty rate of interest is charged (better than you could get in your savings account) on late payments of interest and on late repayment of capital. That way at least you won't mind so much if it all gets delayed, which is a common occurrence when dealing with these types. I mean it's lovely that there are people out there prepared to take risks and think big and get things done, but it's a personality type that has its downsides and this is one of them.