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More than a dozen property schemes in the north of England that were promoted to investors in Asia – in one case by former chancellor George Osborne – have either stalled indefinitely or collapsed outright, a Guardian Cities investigation has found.
Hundreds of investors claim to have lost money to an increasingly popular property model known as “buyer-funded development”. In these schemes, rather than go to banks, developers finance projects using multiple small investors’ deposits – which can be up to 80% of the value of the unit.
But, according to some investors, money has been taken without the units being delivered. Some describe losing their life savings and say they have approached police for help recovering their funds.
Others say they believed the developments were somehow state-guaranteed because they were promoted as investment opportunities by officials from local or national government.
City of London police said they received more than 800 complaints of fraud involving property between 2015 and 2017. Overseas investors had reported losses of more than £10m, they said.
The same developers and contractors appear in a number of the schemes examined by the Guardian, which between them promised to construct almost 5,000 homes or student rental units in cities across the UK. Five of the schemes examined by the Guardian are sited in Liverpool.
They include the £200m “New Chinatown” development, advertised by the developer North Point Global as a “massively prestigious project” with 790 residential units and a 140-room hotel, as well as leisure and commercial space.
The development was one of several projects in the north of England promoted to overseas investors by Osborne during a 2015 “trade mission” to China. Osborne told the Liverpool Echo that he was working as a “tag team” with the city’s mayor, Joe Anderson, to persuade individuals to invest in the scheme.
However, the development has since been mired in problems, with little sign of progress at the construction site. Amid increasingly serious complaints by investors and several missed deadlines, Liverpool city council commenced legal action against the developer last year and said it had referred the scheme to the National Crime Agency.
