The newspaper had exclusive access to research by the Which? Organization, which is looking at unregulated property investment companies and how some of them might be misleading potential investors.
Many people disillusioned by the low interest rates on conventional saving accounts are looking for higher returns. Traditionally, property has been seen as a sound investment opportunity. The Telegraph, however, said that there are some companies promoting new developments of buy-to-let properties and presenting them as high-yield, low-risk investments. People are being persuaded to invest in these schemes, but unless they have conducted extensive research, the risks could be much higher than they anticipate.
Should the marketing of these investment schemes turn out to be misleading, there is no protection under the Financial Services Compensation Scheme from unregulated companies. If the investors lose some or all of their money, they will not be entitled to compensation.
Which? is not against all buy-to-let investments, but it stresses that investors need to carry out full research before parting with their money.
Thanks to increases in stamp duty and decreases in tax relief, buy-to-let investments are more costly than a year ago, but there are still some sound investment opportunities available. Commercial mortgages can be obtained with low interest rates to enable experienced and well-informed new landlords to invest in the buy-to-let market.