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What should your solicitor have told you?
The SRA expects solicitors acting for buyers in schemes like this to explain how the purchase differs from buying an existing property. It also expects them to explain the risk that the developer could fail and money could be lost.
In some cases it would reasonable for your solicitor to have told you to seek further specific advice before proceeding with the transaction.
TLW Solicitors has explained these duties in more detail in its recent post on the Galgate Silk Mill scheme, and in an earlier post on whether a conveyancing solicitor could be liable for losses in an unregulated collective investment scheme.
The Villas (also known as the Aire development) was marketed as a conversion of an old police station on Boothen Road into student apartments close to Staffordshire University. A listing on Buy To Let Invest describes 181 studios and two-bedroom apartments across two blocks. It offered an “assured” net yield of 8% a year for three years and 4% interest on deposits, with prices from £69,995.
Other agents advertised different figures. A PrimeLocation listing referred to 8.5% net yields for three years. Birchmore Ltd advertised assured rent of 9% net a year and said completion was scheduled for the 2022 student intake.
TLW Solicitors is acting for a number of purchasers caught up in The Villas Scheme.
What is an assured rental return?
An assured or guaranteed rental return is a promise to pay the buyer a fixed income for a set period, whether or not the unit is actually let. It is usually given by the developer or a linked company rather than by an independent insurer.
That means the promise is generally only as reliable as the company making it. If that company cannot pay, investors may be left with a contractual claim against it and little else. A fixed return also tells an investor little about the rent the unit would earn on the open market once the assured period ends.
The Solicitors Regulation Authority (SRA), the regulator of solicitors and law firms in England and Wales, lists “comparatively high returns” among the red flags in its warning notice on investment schemes including conveyancing. It says there is no particular reason why fractional property investments should provide high returns, and that solicitors must advise clients of the risk of losing their money.
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Does a missed payment mean you have a claim?
Not automatically. A missed payment does not by itself show that your solicitor was negligent, and each case depends on what the solicitor was instructed to do and what advice was given.
The important questions are whether the risks were properly explained before the investor committed their money, and whether clearer advice would have led them not to buy.
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What should Villas investors do now?
We would recommend you gather your documents and seek urgent legal advice.
Useful documents to include:
- the reservation form, contract and lease for your unit
- any assured rent or management agreement
- your solicitor’s report on title and client care letter
- brochures and adverts showing the returns promised
- rental statements showing what has and has not been paid
- emails and letters with your solicitor, the developer and any sales agent
If you no longer have your purchase paperwork, we can obtain the same from your former solicitor.
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Are there time limits?
Yes. Negligence claims are generally subject to a six-year limit under the Limitation Act 1980, with an alternative three-year period from the date of knowledge in some cases under section 14A.
Many Villas purchases appear to date from around 2020 to 2022, so investors should take advice promptly.
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TLW Solicitors’ comment
“Assured rent can make a student accommodation investment look secure, but that assurance is generally only as strong as the company giving it. When the payments stop, investors often find they have far less protection than they thought.
My team is acting for a number of purchasers at The Villas in claims against the solicitors who acted in the conveyancing transaction. In schemes like this, a key question is whether the buyer’s own solicitor explained the risks of the scheme before completion of the transaction.
If you invested in The Villas and are not receiving the returns you were promised, or are concerned about whether you will be able to sell your property, please gather your paperwork and get in touch with my team to discuss your next steps. Time limits apply, so it is important not to delay.”
How TLW Solicitors can help
TLW Solicitors is acting for a number of purchasers at The Villas in claims against the solicitors who acted on their purchases. The firm helps investors who have lost money in failed or unsuitable pension and investment schemes, including property-based investments.
If you or a loved one bought an apartment at The Villas, or in a similar assured rent or student accommodation scheme, we can help you understand whether a claim against your former solicitor maybe possible.
This article is for general information only and is not legal advice. The law may have changed since publication.
Please contact us for advice on your circumstances.
