Mulholland makes case for urgent action against mis-selling of greenfield land

Greg Mulholland, Liberal Democrat MP for Leeds, North-West

Mr Mulholland said, ‘I wish to focus specifically on the practice in which a number of disreputable companies and individuals around the country are engaged: the misrepresentation and mis-selling of greenfield land, which is becoming a critical issue in many rural and semi-rural areas. Before I expand on that, I want to make it clear that my purpose today is to ensure that after the debate the Minister and the Government will agree to work with me and MPs from all parties who are also concerned to address this issue. I shall make some suggestions later as to how that could be achieved.

‘Let me define precisely the relevant issues. In broad terms, land banking is simply the practice of purchasing undeveloped land for future developments or resale. That investment often comes in the form of land investment companies or partnerships buying land, subdividing it and then encouraging secondary investors to buy individual plots. If the land value increases, the investment companies gain a high return, and the secondary investors also benefit. In the vast majority of cases, for the value of the land to increase substantially, a “change of use” must be accorded to the land, which means that local councils must grant permission for it to be developed. If it is green belt land, there needs to be a change in status.’

‘I come to the specific proposals, for which there are precedents in other parts of the world. As the Campaign to Protect Rural England has highlighted, in Australia in December 2005 the European Land Sales Partnership stood accused of grossly misleading potential investors over its ability to obtain planning permission and the likelihood of planning permission being granted on the tracts of land that it owned. The key difference in that case was that the state government of Victoria was able to act quickly and decisively to bring a halt to the mis-selling. The state legislature obtained an interim injunction order against ELSP, which prevents it from engaging in a range of promotional and marketing activities until there has been a full hearing into its activities, which is due to take place in the Victoria Supreme Court this year. So far, no such decisive action has taken place in the UK. The only course of action for investors who feel that they have been sold land on a false premise or been the subject of misrepresentation would appear to be to pursue cases individually through the courts.

‘There is a strong coalition working on this matter. As I mentioned, I am working with the CPRE. I am also working with several MPs from all parts of the House, and I have been contacted by reputable land investment companies, including possibly the largest such company in the United Kingdom, UK Land Investments Group. Firms of that nature are concerned, because they invest large sums to ensure that land is bought and sold legally and without misrepresentation. They wish to see fly-by-night organisations brought to book for their scandalous practices and the damage that they do to the industry.

‘We may need new legislation for that to take place or we might simply need the extension or clarification of existing legislation. Sufficient powers might already exist but they might not be being used. What is clear is that, because of loopholes in the law, a lack of law, or a lack of action on the part of the Government, firms are being allowed to escape unpunished, despite engaging in practices that are misleading and misrepresentative. I hope that the Minister will acknowledge that.

‘In addition to challenging the Government to consider legislation, I propose the setting up of an independent, self-regulating body to monitor the actions of land investment firms to ensure that they are not engaging in the kind of practices that I have mentioned. Such a move could include the establishment of an accreditation scheme to ensure that firms act responsibly and correctly. Only where organisations are found to be acting accordingly with agreed guidelines would they receive accreditation and thus be allowed to persist in investing in, and selling on, tracts of land.

Mr Mulholland concluded, ‘Today, I am tabling an early-day motion, which is co-sponsored by the hon. Members for Stroud and for North-East Milton Keynes (Mr. Lancaster), which I hope many hon. Members will sign. I ask the Minister and the Government to take the issue seriously and to acknowledge that there is a problem that needs to be tackled. The situation has been allowed to persist for far too long, and urgent action is needed to stop companies, partnerships and individuals ripping off their investors and damaging our communities. I hope that the Minister and the Government will work with me, my parliamentary colleagues and the organisations involved to stop the unacceptable mis-selling of greenfield land.

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