Developer’s scam leaves buy to let purchasers £12m out of pocket
Six directors have been banned from office after misleading over 300 people who bought new build homes in the north of England.
The buyers spent £12m on buy to let units, mostly in Bradford and Greater Manchester.
Four of the directors are based in Malaysia, including one who has been disqualified for 12 years, while the remaining two live in The Wirral and north London.
The investigation conducted by the Insolvency Service centred on Absolute Living Developments Limited which sold apartments in England off-plan to investors who were largely based in Asia.
Absolute secured at least £12m; it had been incorporated in November 2013, with registered offices in Liverpool. The company specialised in conversions of commercial buildings to residential.
Problems arose when investor buyers complained that the developments had not been fully completed and the apartments were unliveable.
Absolute Living Developments was wound-up by order of the courts in April 2016 following the presentation of a petition by Bradford council due to unpaid rates and investigations that followed principally focused on developments in Bradford and Manchester.
Investigators discovered various examples of misconduct by Absolute Living Developments facilitated by the directors.
The company provided misleading and incomplete information about the developments to investors, meaning people couldn’t carry out due diligence.
Absolute Living Developments had no ability to ensure the terms of contracts with investors could be met and failed to provide adequate safeguards for money obtained from investors.
For one of the developments, Absolute Living Developments requested completion payments from investors despite the development not being completed.
And the company signed charges over Absolute Living Developments’ assets, which meant that a third party owns them and there are no remaining assets in the liquidation to pay creditors.
An independent insolvency practitioner has been appointed in this case to investigate recovery of assets for the benefit of creditors. The liquidator’s actions are ongoing and to date they have received claims from creditors in excess of £68m.
Ken Beasley, Official Receiver for the Insolvency Service says: “This was a complex investigation, considering the amount of money that was invested, not all of the directors were based in the UK and we worked with several other authorities.
"We want to draw attention to these rogue directors so we can alert people about the risks involved when investing, while also warning that we will investigate and tackle those that set out to deliberately rip people off by misrepresenting the investment opportunity on offer."