New Delhi: The promise of a plot in the idyllic English countryside near London, with an assurance that its price would rocket once regulators rezoned it as residential land, proved too hard to resist for at least 400 investors from India.
Unfortunately for them, it was a promise that was too good to be true.
The investors, some of whom squandered away their life’s savings on the scheme advertised last year, are from among at least 4,500 people who paid a collective £69 million (around Rs514 crore now) to UKLI Ltd, a UK-based land banking company that has since become insolvent and is unable to meet liabilities, according to Deloitte and Touche Llp., the audit company appointed as its administrator.
Besides India and the UK, UKLI had attracted investors from Pakistan, Georgia, South Africa, the US and Canada, and a small number of investors “based in Japan and European countries such as Greece, Sweden and Holland”, Deloitte said in an email reply to queries from Mint. Deloitte said it wasn’t able to provide an estimate of the money invested by Indians alone.
In April, the Financial Services Authority (FSA), Britain’s financial regulator, ordered UKLI to wind up its business “for operating as an illegal collective investment scheme and denying its investors protection for their money”.
By then, UKLI had sold 1,000 acres of agricultural land in 13 sites carved up into 5,000 plots. The land, on freehold ownership, was going cheap because it was not developed. The company promised that it would “lobby” to secure all necessary approvals required to build houses there. Once the approvals came through, the land price would zoom up, it told investors.
Just an illusion: The brochures advertising the plots.
What UKLI did not tell them was that 11 of the 13 sites on offer were in the so-called green belt where no development is allowed under English law, according to a transcript of a creditors’ meeting held on 24 June by the administrator, which is available on UKLI’s website (Uklandinvestments.com). The two not in the green belt—Paddock Wood and Darmans Lane—had “onerous restrictions” in place with little prospect of development being allowed, the transcript said.
FSA is armed with an interim freezing and restraining order against UKLI to protect its assets for creditors, including investors. But FSA warns that UKLI operated an illegal scheme, meaning the investors aren’t entitled to complain to the financial services ombudsman or claim compensation from a statutory fund.
Dream to nightmare
For those who took UKLI’s promise at face value, the dream of owning a piece of English property is turning into a nightmare.
Like the 54-year-old widowed mother of two who invested Rs26 lakh, her life’s savings, to buy two plots after she saw newspaper advertisements in March 2007 promising high returns on land purchases in the UK. The ads were released by UKLI Real Estate Pvt. Ltd, the Indian branch of the UK-based land banking company.