Property sourcers have been banned from posting on the Property Tribes website unless they belong to a redress scheme.
The decision follows what the site describes as “an increasing number of calls from people who have lost life-changing amounts of money to deal sourcers, portfolio building companies and other such entities”.
The site says: “Today, we have heard from an elderly lady who has lost £800,000 to one such operator. She has no contract with the company and no charge registered on the Land Registry for the property she thought she had purchased, even though the deal sourcer has been charging her £6,000 per month to ‘manage her investment’.
“Needless to say, the individual who has taken this money is not registered with any scheme.”
The site criticises the deal sourcing arena as being largely unregulated, attracting a large number of unscrupulous operators and rogues, with many one-man bands operating, with no redress for consumers.
From now onwards, any deal sourcing agent or letting agent posting on the site will have to display their ombudsman membership number and say which scheme they are registered with.
Any who cannot provide an ombudsman registration number will have their account suspended.
Deal sourcers – as distinct from buying agents – often promise great wealth, together with ‘education’ or mentoring, as well as ‘below market value properties’ which often turn out to be no such thing. Such is the scepticism felt by mortgage lenders that they usually decline to lend on any property where a deal sourcer or property club is involved.
Other commonly used phrases designed to lure property investors include “off market” deals, “discount deals”, “no money down” and “armchair investment”.
The three redress schemes are the Property Ombudsman, Ombudsman Services (Property) and the Property Redress Scheme.
In the first page of a search on Google for property sourcers in the UK, we found only three that were displaying redress logos, in both cases TPO. One that was displaying the logo also showed the logo of the defunct OFT.
However, most of the property sourcers we found online also appear to be acting as estate agents, meaning they would not only have to sign up to a redress scheme, but register for anti-money laundering purposes and data protection.
Since October 2015, TPO has had a Code of Practice for residential buying agents.