View guides

Investors Hit by the Collapse of UK Student Property Scheme

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Over 1,000 investors have been hit by the collapse of a £100m student accommodation property scheme.

Retail investors from Britain, the Middle East and Asia who became involved in the scheme are now pursuing complaints after being marketed annual returns of 8-12 percent.

The company, A1 Alpha Properties (Leicester) Limited, was due to pay investors a steady income generated from student rents on the properties.

Investors are said to have put in an estimated £100m into the scheme but are not receiving any income at all.

Reports suggest that just over half of the 2,000 or so rooms across the scheme' 19 sites were occupied in February. The purpose-built student accommodation is located in areas such as Bradford, Huddersfield, Leicester, Loughborough, Preston and Stoke.

The collapse of the firm has been attributed to an excess of student accommodation, along with delays in construction at some of its sites.

Quantuma has been appointed as the administrator for A1 Alpha Properties and is planning to restructure the scheme by breaking it up on a site by site basis, with investors hopeful they will receive returns in the future.

The collapse of the scheme highlights the growing importance that investors fully understand local market dynamics, with national trends not reflective of intra-city fundamentals.