Claremont Forbes Ltd: Collective Investment Scheme and Limited Liability Partnerships

There is an interesting article by Tony Hetherington on whether having a Limited Liability Partnership means that a land banking property company will not be classified as a collective investment scheme. A number of the UK land banking companies have been shut down on the grounds that they are a collective investment scheme and therefore come under the aegis of the Financial Services Authority, which means that those managing a CIS must have FSA approval and also offers investors some protections. 

Incidentally wine investment funds are collective investment schemes and the 1990s ostriches/ostrich eggs investment schemes were also judged to be CISs.   

Tony's article appears on Midas Extra, which is a subscription site run by Associated Newspapers. Click here for details.

Although I cannot reproduce Tony's article I can mention some of its salient points.
Claremont Forbes intends to offer investors parcels of land that already has planning permission. Each land site would be organised and managed as a Limited Liability Partnership.

Terence Farr, director of Claremont Forbes, believes that this would mean that it wasn't a collective investment and so those offering and managing it would not need to be approved and registered with the FSA (or with the Bank of England when it takes over the FSA functions). He does, however, expect that the FSA will attempt to close him down on the grounds that this is a CIS.

It is quite possible that the FSA will take a close look at this use of LLPs for land banking schemes. They are likely to want evidence that the investors are actively running the partnership and the building plot scheme. Not a question of being just a sleeping partner!  

You have to wonder how many investors will have both the inclination and the skills to be actively involved running an LLP.

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Following a message I received from Terence Farr, director of Claremont Forbes Ltd, I have reviewed the comments made by his company on two earlier posts. I have made some amendments and deletions.

I have asked Terence Farr the following questions and am looking forward to his response.  I will be particularly interested in learning exactly what experience he and his 'highly experienced team' have in the property and land development market. We do know that some of the sales force including a 19-year-old do have experience selling wine while working for a company (Finbow) now under investigation by the Metropolitan Police. 

'We are a leading London based company dedicated to offering exclusive UK land development opportunities to private clients on a worldwide basis.’

From Claremont Forbes website

Since Claremont Forbes was incorporated on 29th January 2010, is the description ‘leading’ justified here?

‘At Claremont Forbes you will find a highly experienced team who take pride in offering a best-in-class service.’

What property experience do you and your team have?

From Tony Hetherington’s article on Midas Extra:
‘So, what is Claremont Forbes offering?  So far, not a lot.  The company is run by 28-year-old Terence Farr, who has never headed a limited company before.  He told me that it is offering land in Kent, but he added that it was ‘in the process of acquiring one new site as well as finalising a recent property investment club’ – so it appears there is as yet no LLP up and running that the FSA could put under the microscope.’

What land with planning permission in Kent are you offering? Also is Claremont Forbes (Margate Kent) LLP up and running.

 

Would agree that Tony Hetherington’s conclusion (see below) is fair comment?
‘But unless those investors know what they are doing, and perhaps have some knowledge of planning and development, and land values, it is hard to see the attraction.  And with Claremont Forbes itself anticipating a battle with the FSA, it is easier to see the downside and decide to steer clear.’

Claremont Forbes Land & Property Ltd

I have received several messages about this recently formed company from people who have been offered land investments by their sales force.

Claremont Forbes Land & Property Ltd was founded on 29th January 2010. Its paid up share capital is £1.
(Companies House records: LATEST SOC 29/01/2010 29/01/10 STATEMENT OF CAPITAL;GBP 1)

Extracts from the company's website suggests that Claremont Forbes has done really remarkably well to become 'a leading London based company' in just over three months since being set up:

'About Claremont Forbes (www.claremontforbes.co.uk)

‘A leading London based company dedicated to offering exclusive UK land investment opportunities for private clients. ‘

‘Due to a huge wealth of knowledge and extensive contacts with land owners throughout the UK, the company is perfectly geared to exploit current market conditions and offer investors a fantastic opportunity to profit on the recovery of the recession.

By working closely with our acquaintances, Claremont Forbes strive upon ‘cherry-picking’ prime located land sites with planning permission, ensuring we deliver a product which offers tremendous high-growth potential, at the same time as safeguarding one's current exposure within this volatile market.

Here at Claremont Forbes you will find a highly experienced team, on a multitude of levels, predominantly within the UK land and property market. The key to achieving our goal is that we operate devotedly with our clients, offering our expert knowledge to cater for investments that perfectly compliment existing portfolios, at the same time as positioning ourselves to yield strong returns in a relatively low-risk environment on the recovery of the recent economic downturn.’

Investment proposal

‘As the recession had taken its toll, this was a time Claremont Forbes became very active in the market place for acquisition.’

‘The forecasted timeframes with our projects are from 18 months +. Likewise, the returns are closely examined by our analysts and vary depending on each site in question. At Claremont Forbes, we strive upon offering very realistic time frames, at the same time as potential returns are based on the success of comparable sites using recent valuations. In order for the business to continue to deliver a strong product, it is imperative we only acquire investment sites with minimised risk, with clear scope of profit potential.’