By Jessica Rose
Assistant producer, Face the Facts
A controversial buy-to-let property firm that claims to offer flats for discounted prices has sold units at above market values, a BBC investigation has found.
Radio 4's Face the Facts series has been exploring Instant Access Properties Ltd (IAP) and its sister company Inside Track Seminars Ltd (ITS), which is now in administration.
Scores of people claim IAP sold them properties which they could not get sufficient rent for or sell for a profit, leaving many buyers in financial difficulty.
However, IAP says many other clients have been able to break even and points out that property is a long-term investment.
Lower values
ITS was set up in 2002 and charged clients about £2,500 for weekend seminars where they could learn how to become property investors.
"The situation is that desperate that bankruptcy is a very strong possibility"
Many also paid thousands of pounds each in membership fees to its sister company IAP, which provided them with access to off-plan properties in the UK and abroad at what it claimed were discounted prices.
Maurice and Anne Brohn, from Manchester, bought flats in Florida and Brighouse, West Yorkshire, in 2005.
Mr Brohn says the Brighouse flat was discounted from £142,000 to £125,000.
However, two estate agents contacted by the BBC say the property would not have been worth more than £125,000-£130,000 at that time.
The property is now valued at £110,000-£115,000. The Brohn's Florida apartment, which cost $196,000 is being sold for $130,000.
The couple say they have lost thousands of pounds and have had to sell their own home.
"The situation is that desperate that bankruptcy is a very strong possibility," said Mr Brohn.
"This is all as a result of our involvement with a company to whom we paid large sums of money to do precisely the opposite."
Comparable income
Maria Knapple and Robert Hole from West London bought three properties in the Leeds area between October 2004-February 2005.
They have not been able to get the rents IAP gave them as a guide.
One property brings in £300 less per month than the figure they were originally given.
"The figures were not said to be estimates or guesses, these were said to be comparables with incomes from equivalent places in the same areas," said Mr Hole.
Still in business
Simon Bunce from Andover in Hampshire went to an ITS seminar in 2004. He reserved a flat in Gainsborough, Lincolnshire.
"There may be periods with any investment property that an investor might be expected to subsidise rents"
He was assured the development had planning permission. However west Lindsey District Council has confirmed it had not given the flats the go ahead at that time.
Mr Bunce got his seminar and membership fees back after contacting his credit card company and also threatening legal proceedings. The case was settled out of court.
ITS went into administration in April. However IAP is still offering seminars and off-plan properties.
Independent appraisal
When the BBC rang IAP posing as a potential buyer a sales consultant said membership for one year would cost £7,447.
The BBC was offered a two bedroom flat in Clapham, London, which would be built in 2010, for £352,538, discounted from £414,750.
However, three Clapham estate agents valued the property at current prices at £300,000-£350,000. All agreed that £414,750 was well above current market value.
IAP group managing director Tony McKay says property prices are independently assessed.
"All schemes are appraised by an independent RICS surveyor prior to us releasing a scheme to our member base as well as us having gathered rental comparables or estimates from local agents.
"This information is gathered as supporting documentation which cannot and should not be used as any guarantee on future pricing - nor do we ever suggest that it should."
Demand for rental
Mr McKay added that property is a long term investment so there will be times when people do not make money.
"There may be periods with any investment property that an investor might be expected to subsidise rents - because of the nature of medium to long term investment we would urge those investors to look at the longer term capital gains," he said.
"Across all our educational events we have always, and continue to, advocate viewing property as a medium to long term (seven to 10 years) investment strategy.
"It is therefore reasonable to suggest that selling any unit introduced by IAP is currently acting against any of our advice being that IAP was only established in 2003.
"Indeed this is true of any investment vehicle in that changing a strategy in the early years many result in a loss.
"Across the many hundreds of developments we have offered it is reasonable to expect that there are some that have performed better than others and those members with the largest and most diverse of portfolios will have been able to balance out their performance.
"Our view would be that property remains a solid investment vehicle for those prepared to be realistic about timeframes. As an organisation we see no reason to change our long term belief that demand for rental units will remain high with home ownership increasingly out of reach for many."
Face the Facts will be broadcast at 12:30 on 25 July and 21:00 on 27 July.
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