More than a dozen property schemes in the north of England that were promoted to investors in Asia – in one case by former chancellor George Osborne – have either stalled indefinitely or collapsed outright, a Guardian Cities investigation has found.



Hundreds of investors claim to have lost money to an increasingly popular property model known as “buyer-funded development”. In these schemes, rather than go to banks, developers finance projects using multiple small investors’ deposits – which can be up to 80% of the value of the unit.

But, according to some investors, money has been taken without the units being delivered. Some describe losing their life savings and say they have approached police for help recovering their funds.

Others say they believed the developments were somehow state-guaranteed because they were promoted as investment opportunities by officials from local or national government.

Q&A What is buyer-funded development? Show Hide It is an increasingly popular model of financing property developments by using deposits from many individual buyers. Apartments are sold off-plan to buyers, often overseas, who pay substantial deposits of up to 80% upfront. Their money is used to fund the entire project, from marketing fees to construction costs. The model has become more commonplace since the financial crisis of 2008, after which it became harder for developers to borrow from banks and institutional lenders to fund their schemes. It is seen as a risky form of investment as construction often begins without the commitment of funding to complete it, and there is no safety net if costs balloon beyond projections and funds run out. The Solicitors’ Regulation Authority has warned of "substantial risks” of misappropriation of money the developer failing to deliver on the proposal or becoming insolvent, with buyers “unwittingly financing high risk or fraudulent property development.”



City of London police said they received more than 800 complaints of fraud involving property between 2015 and 2017. Overseas investors had reported losses of more than £10m, they said.

The same developers and contractors appear in a number of the schemes examined by the Guardian, which between them promised to construct almost 5,000 homes or student rental units in cities across the UK.



Five of the schemes examined by the Guardian are sited in Liverpool. They include the £200m “New Chinatown” development, advertised by the developer North Point Global as a “massively prestigious project” with 790 residential units and a 140-room hotel, as well as leisure and commercial space.

The development was one of several projects in the north of England promoted to overseas investors by Osborne during a 2015 “trade mission” to China. Osborne told the Liverpool Echo that he was working as a “tag team” with the city’s mayor, Joe Anderson, to persuade individuals to invest in the scheme.

However, the development has since been mired in problems, with little sign of progress at the construction site. Amid increasingly serious complaints by investors and several missed deadlines, Liverpool city council commenced legal action against the developer last year and said it had referred the scheme to the National Crime Agency.

Last July North Point Global announced it would seek to offload all of its property developments because its brand was “tainted and damaged beyond salvage” as a result of criticism by the council and reporting by the Liverpool Echo, which has covered its developments extensively.

Facebook Twitter Pinterest The projected New Chinatown development in Liverpool and the building site as it is today Composite: BLOK Architects/Christopher Thomond for the Guardian

“Everyone in North Point Global group is totally and utterly devastated that the group has been unable to complete its development pipeline and that as a result buyers have incurred any losses,” said Samuel Beilin, speaking on behalf of the firm.



He said North Point Global and its staff had not been approached by the National Crime Agency, “nor any regulatory or prosecutorial body, for that matter”.

Last week Liverpool city council announced that a new developer had agreed to take over the site. It said it was intended that investors who had already paid for units would receive them.

A spokesperson for Osborne, who is now editor of the Evening Standard, said: “As chancellor, Mr Osborne was pleased to work with local Labour councils in the north of England to promote jobs, development [and] overseas investment in the northern powerhouse.”

Facebook Twitter Pinterest Former chancellor of the exchequer George Osborne delivers a speech at the Shanghai Stock Exchange, 2015. Photograph: Aly Song/Reuters

In another case, the company developing the Angelgate complex in Manchester was placed in administration following a petition of investors to the high court last year.

In a document filed with Companies House, the administrator of Pinnacle (Angelgate) Ltd said that, of the £31m accrued from off-plan purchases by investors, £13m had been paid to a related Pinnacle company in sales and marketing commissions.

“It is not clear how on any basis [Pinnacle Angelgate] could justify spending over 40% of the funds received from buyers on sales and marketing commissions, particularly as this meant the company was [circa] £10m short of the … contracted design and build cost from the outset,” he wrote, adding that he understood more than 70 buyers had reported concerns to police and that Greater Manchester police and HMRC had launched their own investigations.

A spokesperson for Pinnacle said authorities had not contracted the company and it would fully cooperate were they to do so.

At least three other developments by the Pinnacle group have faced problems. Last month the company set up to develop the Quadrant student accommodation in Liverpool fell into administration after running out of money, and investors in the Paramount and Spectrum developments in Liverpool and Sheffield have alsocomplained of delays.

The Pinnacle spokesperson said Angelgate and Quadrant were now in the hands of administrators, but that it was “working extremely hard on completion dates for both Spectrum and the Paramount” and liaising with companies representing buyers for both properties. “There is currently no need to discuss refunds and both developments are near completion,” they added.

Promises v reality: how the schemes were sold – and what they look like now Read more

Police in Hong Kong are also reported to be investigating another firm, Absolute Living Developments, which marketed at least three off-plan property opportunities to investors before falling into liquidation in 2016.

One of the individuals since accused of wrongdoing by the liquidator has denied the allegations and said they would be contested “in the strongest possible terms”.

In 2014, Key Homes Group, which marketed at least six developments off-plan to overseas investors, also fell into administration.

“The UK government must take action,” says James To Kun-sun, a member of Hong Kong’s legislative council, who estimates that more than 700 buyers in Hong Kong alone have lost an average of £45,000 to failed buyer-financed developments.

“People here have a sentimental link with the UK, as a place with a responsible government, democracy and the rule of law, so it is shocking that this can be allowed to happen.”

If you have been affected by the development schemes described and would like to pass on information in confidence, you can send a message via the Guardian’s SecureDrop service (see how here).

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