Attempts to lure investors into property schemes with extremely unlikely returns have resumed in Liverpool, the city's leader of the opposition has claimed.
Councillor Richard Kemp made the warning during a heated meeting this evening to examine a council report into stalled developments in the city in which investors have lost millions.
The report, compiled by assistant mayor Jane Corbett after months of meetings and interviews with experts in the planning, financial, legal and construction industry, had 11 recommendations for the council.
Its findings included that there was "no known advice" to the public about the "high risk" involved in fractional investment – adding that it was "disturbed by the lack of coherent advice". That was a "serious gap and a grave concern, not only in Liverpool but nationally".
Findings also included that the ability to hold developers to account was "highly unsatisfactory", and that with investors often not paid promised financial returns, they may have then "cut corners" on rental yields. That meant the tenant "reaped the disadvantages".
The report also revealed that developers had used the city council’s logo without consent for promotional purposes – but that planning permission "must not be taken as the council's approval of the scheme".
The panel heard evidence from a developer who said while there were "good, established" operators in Liverpool, there were also "opportunist entrants who lacked experience".
Discussing the report at a regeneration and sustainability select committee this evening, councillor Kemp said that, after a period of calm, there were adverts circulating from investors once again claiming to offer returns on investment that he said were completely unachievable.
Fractional selling, where a building project is funded by selling flats off-plan in advance before it is built, has become a common way of developing in Liverpool.
Investors are promised "yields" in return, including interest on their investments and rental income, once the buildings are finished.
Many developments have been successfully built that way, but some high-profile schemes in cities like Liverpool have stalled.
A recent report by leading property agency City Residential said investors in Liverpool were now becoming far more risk averse to this method of selling – with the model "starting to struggle across the board".
Councillor Kemp said: "We had about four months in which we weren't getting scam documents and brochures through from people making absolutely unlikely promises of guaranteed returns on the market in Liverpool. Those have started up again.
"People, because they are getting desperate for places to put their money because of where interest rates are looking at place to invest.
"We need to be selling this report in a way that says 'we know there have been problems but if you are thinking of investing in our city or anywhere else there are some simple rules you should follow'.
"We need to be far more aggressive if we are to be seen to be cleaning up our act and actually admit what has gone wrong here."
He also made separate comments during the meeting linking companies being investigated by the police to the council's events programme and of council activities at the international property event MIPIM, provoking an angry reaction from Mayor Joe Anderson.
Mayor Anderson said councillor Kemp's comments were about "beating Liverpool up" and said suggestions the city "aided and abetted" questionable property developers had no basis in fact.
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Mayor Anderson said: "He talks about MIPIM. We made it absolutely clear that because of the financial constraints that the city was under that we were stopping going to MIPIM.
"I said to the private sector that the only way we would go to promote our city and everything that they do here was if the city council didn't have to pick up the bill. That's exactly what happened in other cities like Leeds and Manchester as well."
He said businesses in the city would be "incensed" at a suggestion of impropriety because they spend money sponsoring council events.
Councillor Kemp also said Liverpool had a specific and disproportionately large problem with fractional sales – but his comments calling the city the "epicentre" of the issue were criticised by councillor Corbett.
Councillor Corbett said: "The epicentre means that something starts from somewhere. This does not start in Liverpool.
"There is a major problem in Liverpool and we have said there is but there are in other places as well. That includes Manchester down the road.
"Making these comments regularly is not helpful to the city at all and is not helping other people either and it is not helping the developers who put time and money into this city to make it the great city that it is so I'm actually quite angry about that."
Despite the fiery exchanges, the committee backed the scrutiny panel's report unanimously, meaning it will now go to cabinet for approval before a meeting towards the end of the year examining its implementation.