Seeking Advice/Other Investors re Hurn House Student Halls of Residence Investment

ConcernedInvestor68

I am writing regarding the unlawful circumstances regarding the purchase and management of Hurn House, 4-6 Christchurch Road.

The property is used for student accommodation and is in full occupancy with tenants paying market value for private en suite rooms with shared common living areas of around £175-£225 per week. 

The building is owned and managed by 'Wilson and Sharp' a commercial property investment company who share the same address as Hurn House.

In 2015 Wilson and Sharp sold all 151 rooms in the property to investors based upon documented terms and conditions: 

1. A return of 5% interest per annum from payment until completion of the building so it was ready to let (not honoured),

2. A guaranteed rental income paid to the investor for five years (honoured although very delayed) 

3. Finally a buy back option after 5 years (purchase price + approx 10%) . However, after the five year term had completed W and S offered all investors a buy back price equivalent to the sale price and claim that because not all investors are 'on board' the buyback process cannot be completed. Meanwhile all investors continue to receive a very poor rental return fee (approximately 35% of market value). There are no legal grounds to terminate the buy back and investors, some of whom are pensioners are left being the victims of a complex property investment scam. At the moment therefore investors receive 1.66% ROI and we are seemingly in a check mate situation. Wilson and Sharp barely communicate ever.

I wondered if there is an Ombudsman body I could write to or if there are any Hurn House other investors who I can share this forum with. 

user1977

Do you have legal advice that your interpretation of the contract is correct? We've had similar previous thread(s) here and the terms had plenty of get-out clauses (and obviously at odds with the initial sales pitch).

I doubt there's any relevant ombudsman, unless you got advice from your own solicitor/surveyor which has turned out to be negligent.

eddddy

This is likely to be classed as an 'unregulated business investment'.  As it's a business investment, it's unlikely that any consumer protection laws apply, and there would be no ombudsman.

And as it's unregulated, Financial Conduct Authority rules won't apply.

So it's entirely down to what your contract documents say (and probably not what a salesperson told you).


FWIW, a few years ago I read through a contract from another company (not the company you mention) for a similar investment scheme. It might be worth checking for any similarities with your contract. 

In my case, the document comprised of 110 pages of lease agreements, leaseback agreements, buyback agreements, and general t&cs. Highlights included:

• A confidentiality clause - the investor is not allowed to disclose the existence of the contract, or any of its contents to any 3rd party. So discussing the contract with other investors and/or discussing the contract in an online forum would be a breach of contract. (I'm not sure if the company would have claimed that your solicitor is a 3rd party.)

• You can only rely on what the contract says - you expressly cannot rely on what any salesperson said, or what any marketing materials said.

• The 'Buyback Guarantee' was worthless, because of the associated conditions. (Words to the effect of: "The company guarantees to buy back the rooms, if they feel they can afford to. If they feel they can't afford them, they won't buy them back.") 

• The leases obligated the investor to pay (high, uncapped) service charges for the next 150 years.  The company was solely responsible for finding tenants for the rooms and setting the rent. There was no guarantee that tenants would be found, and no guarantee that rents would be higher than service charges. So the investor could end up pumping in more cash for the next 150 years, with zero return.

(But I'm not sure if all these terms would be enforceable, if it went to court.)


But back to your contract - have you studied your contract in detail, to make sure it says what you mention in your post? Maybe you should instruct a solicitor to review the contract and advise on it.

But realistically, instructing a solicitor to read and advise on a 100+ page contract is likely to be expensive.




Edit to add...

If there is a confidentiality clause in your contract, similar to the one mentioned above - maybe edit out the name of the company and the property address from your initial post, in case the company can work out who you are. And make this a more generic discussion. 

silvercar

I’d search online to see if there are other investors in the same situation. Sometimes there are Facebook or Reddit groups.