Consumers Warned About Dodgy Property Investments
As part of a national campaign, NSW Fair Trading is urging consumers to be aware of property investment schemes promising big returns with low risks.
While there are companies in Australia offering credible property investment opportunities, a number of rogue operators apply high pressure sales tactics using ‘obligation free’ seminars to persuade people to sign up on the spot.
These operators, often referred to as ‘property spruikers’, are accepting generous commissions from developers while the consumer is left with a deal more likely to lose money than make it.
NSW Fair Trading Commissioner Rod Stowe explained that the consumer protection agency continues to receive complaints from those affected. "We have had numerous complaints from consumers who have signed up during these property investment or ‘wealth creation’ seminars and lost tens of thousands of dollars," Mr Stowe said.
"Consumers are advised to take the time to obtain independent financial and legal advice before signing anything to help ensure that they are getting a good deal," Mr Stowe said.
National campaign ambassador and finance expert Paul Clitheroe warned against trusting unreliable testimonies promoting ‘get-rich-quick’ schemes, where the fallout may come years after the first investment.
"You wouldn’t get medical treatment from someone offering the same remedy to everyone in a room, so be wary of the property spruiker who sells the same ‘investment’ scheme to everyone at a seminar
"Basically, the spruikers are just in it for themselves and accept generous commissions once the deal is done. The investor is then left with what is probably a dud deal more likely to lose money than make it."
NSW consumers are warned to be wary of any scheme offering the following:
- The spruiker supplying mortgage broking, conveyancing or tax advice as part of the property deal;
- The suggestion that the scheme is ‘government approved’ by frequent reference to the Australian Taxation Office or Australian Securities & Investments Commission;
- Spruikers offering personal loans or credit;
- Property investment strategies using current equity to borrow significant money;
- Claims of a capital growth rate that may not be independent or credible;
- Spruikers who side-step questions or downplay the risks and costs involved;
- The promotion of a particular property development, as the spruiker may be receiving a commission or have an undisclosed interest in it; or
- Buying properties interstate that you have not seen or off-the-plan properties that do not yet exist.
For more information about property spruikers, contact NSW Fair Trading on 13 32 20 or visit the Fair Trading Website, www.fairtrading.nsw.gov.au.