by LAUREN CODLING
A BUSINESSMAN who is alleged to have targeted ethnic minorities in a so-called “land-banking scheme” has been ordered to stop charging buyers for covenant fees, as it emerged in court that he had made £48 million from plot sales.
A “land-banking scheme” is known as a real estate investment which involves buying large areas of undeveloped land before selling the land at a profit when it has been approved for development.
However, some claimed the scheme is unlawful as hundreds of people are paying covenant charges for land which they are unable to build on. The fees, paid yearly, vary but reportedly can reach up to £300.
The court had previously heard in June that the businessman behind the scheme, Baron Alexander Deschauer, reportedly made £48m from the plot sales. Ruling last week in the county court in central London, Judge Johns QC ordered Deschauer to stop charging buyers for land.
“Costs cannot be incurred on cleaning, maintenance or renewal until the roads and other features exist,” he said. “It would be a surprising conclusion, commercially speaking, that the parties intended to agree a liability to make an annual payment for the maintenance of
roads that do not exist.”
“Moreover, the planning position was that such roads would almost certainly not exist for generations.”
According to court documents seen by Eastern Eye, it is estimated that around 1,700 plots have been sold through Deschauer’s company, at an average price of £24,981, for a plot of land around half to one acre in size.
Action group Land Banking Victims Association Ltd (LBVA), who brought the case to court, was set up by more than 100 plot holders who claimed they suffered financial losses following their investment.
After the hearing, LBVA member Kusum Thanki said the group were “delighted” to have been successful in the defence of payment of covenant charges. She added that the group were in the process of reclaiming charges that had already been paid.
“We hope that this landmark case will serve as a deterrent in the future for such claims and will encourage all victims of this land-banking scheme to challenge payment,” she said.
A vast majority – 90 per cent – of the LBVA members are from ethnic minorities, among them Indian, Sikh, Pakistanis, Bangladeshis, Nigerians, Chinese and Gurkhas.
Some buyers have claimed they purchased the land on the understanding they would be able to build on the plot. However, the land is deemed to be under the green belt policy, which means it is a place of “natural beauty” and therefore cannot be built upon.
However, despite the LBVA’s statements, Judge Johns QC ruled that misrepresentation had not been proven.
The judge ruled: “I have no doubt that each of them believe that is what they were told. They were honest and confident in their recollection. However, that is not necessarily a reliable guide to what was in fact said.
“On weighing the evidence, I have reached the conclusion that no such certainty was communicated by the agents as to planning, whether in the short-term or otherwise.”
Deschauer had previously denied any wrongdoing and expressed “regret” if any buyers feel they were misled. Deschauer, who is Canadian but resides in the UK, claimed that buyers were informed that the time frame for obtaining the land for residential development “could be a long time”.
He also denied buyers were not given enough clarification on the difficulties they may face obtaining planning permission.
According to a member of the LBVA, the group had not decided if they were going to appeal the decision made on misrepresentation. Deschauer’s counsel indicated they plan to appeal, but no official plea has yet been made.