SINGAOPORE - Recent media report stated that Singaporeans are “piling into” property investments in Britain.
I strongly urge anyone thinking of making such an investment to carefully consider the claims by the sellers of these properties.
It has become typical for these investments to be marketed based on the property having a “guaranteed” rental income and exit price, but it is important to remember that a guarantee is only as good as the company that provides it.
Typically, these guarantees are provided by the property developer and cover millions of pounds of rental income and sales proceeds. However, in many instances, the developer has minimal financial assets to fulfil this obligation.
Thus, any “guarantee” given by this company is very likely to be useless in the event that it is ever necessary to implement it; these companies simply do not have the financial means to carry out their promises. Potential investors should, therefore, realise that these “guaranteed” returns are not to be relied upon. In many cases, the advertisers of these investments use confusing terminology such as “assured rental contracts” and “defined exit strategies”. These terms are designed to give potential investors the impression that such returns are in some way guaranteed.
In fact, in the majority of cases, such terms are non-contractual in nature and provide no benefit to investors.
This is an issue that the authorities need to address before more people invest their hard-earned savings into properties that are sold on misleading terms.
I urge the Council for Estate Agencies, Consumers Association of Singapore, and the Advertising Standards Authority of Singapore to look into this issue urgently.
This article was first published on May 22, 2014.
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