Sorting the wheat from the chaff

When you are putting your money where your mouth is, it’s imperative that you are dealing with a solid, reputable organisation that won’t lie and cheat their way to profit using your hard earned cash. Leaving you where? In the lurch.

If you are considering investment of any kind, in particular property investment which is what I am completely passionate about, then you’ve got to do your research. We know it’s not always practical to look at every aspect of an investment proposition; the developer, location, infrastructure, property value and so on, and it’s even harder when you are looking at anything overseas, so I believe that you need to carry out due diligence on the people or organisation giving you investment advice and offering you a seemingly fantastic deal. And this doesn’t just apply to property. Carrying out your own research into an organisation will leave you more confident that the people advising you on how to invest your money are looking after your interests and not just their own.

Historically, property investment has given excellent returns. After all, property value has doubled every 7/8 years for the last fifty years, and that’s why I am  so passionate. But, in common with other investment sectors, it has attracted its own black sheep into the family, and the consumer needs to sort the wheat from the chaff.

We believe that property is an essential part of any investment portfolio. And we let the figures speak for themselves. According to Halifax the annual increase during 2007 stood at 5.3%. So slower than most years, but prices are still rising.

But it’s time to get wise. And it’s time for the Government to get wise on your behalf. Simply put, the problem with the residential property investment sector is that it’s not regulated.

The Instant Access Properties group – incorporating Inside Track – made recommendations to the Treasury as long ago as 2005 that this industry needs to be regulated to protect the interests of the consumer. Although Government officials have made it clear that they supported the aim of raising standards in the residential property investment sector it was made clear that these measures would not be forthcoming in the foreseeable future. So after months of forceful campaigning for regulation and policing of the industry by the FSA, we decided to take action. Our solution? We have written to the British Property Federation (BPF) and the Royal Institution of Chartered Surveyors (RICS) to ask for their backing for a Voluntary Code. After talks with Treasury officials, we published our own draft proposals for a Code of Conduct to squeeze the sharks out of the industry, giving those of us who care about the consumer a fighting chance. As the biggest operator in the sector, it’s our duty to take action.

The Code recommends that practitioners will be committed to: ensuring investors understand the potential risks of investment and do not over extend themselves financially; maintaining high levels of due diligence and transparency of ownership of the properties being offered; using independent property valuations; and supporting investors right through to completion of the property, rather than abandoning them after the payment of fees. Crucially, customers are entitled to a reasonable cooling off period during which they can pull out of an investment without losing any money.

Yes, there’s a slowdown – we aren’t pretending that there isn’t. But when it comes to property we are talking about medium to long term investment. And on this basis property is still an attractive proposition. After all, demand still outweighs supply considerably – and that’s not going to change in a hurry.

So my advice to you? Do your homework, and reap the rewards of acting like a sensible investor.