Millions of pounds' worth of life savings, retirement funds and inheritance invested in a city centre apartment project are feared lost after the scheme stalled and ran out of money, before a deal was agreed to buy it.
Work to the second phase of the Parliament Residence scheme, led by London developer Assetcorp and hoping to deliver 150 "high-end" waterfront apartments in the Baltic Triangle, stopped last year.
The investment vehicle behind the project to deliver almost 150 “high-end” waterfront apartments, called AC Parl Street 2 Ltd, went into receivership. One investor who spoke to the ECHO this week said he had pumped over £900,000 into the scheme.
It’s now close to being bought by prominent city developer Legacie, as reported by the ECHO last week.
But a deal to buy the scheme will not necessarily mean the investors, who are mostly from the UK but with others based across the globe, will ever see their money again.
That’s because AC Parl Street 2 Ltd took out large loans from a number of companies - latterly a firm called Collateral Investments Ltd. According to a ‘notice of appointment of an administrative receiver’ document filed with Companies House, that Manchester-based firm appointed the receiver at the end of last year.
Investors have told the ECHO they were “shocked” at how fast their savings could vanish - and that they were “kept in the dark” by Assetcorp and the financial problems the scheme faced - alleging that the company failed to provide details of any loans being taken out.
They also allege that Assetcorp did not disclose information to investors - and asked them for forward funds to complete the scheme - just days after the receiver had been appointed to try and sell the business.
The development, for which units were sold off-plan, is said to be around “70%” complete and in a “dangerous” condition.
Investors do not blame the new owner Legacie, or David Currie, the receiver who was appointed to AC Parl St Ltd.
They now want to highlight the dangers of schemes like these for other uninformed investors.
Peter Hopkisson, a teacher from Kent, had a total of more than £170,000 invested in the development.
He said: “We wanted to invest in a flat in an up and coming area which would also serve as a base for our two daughters who both went to Liverpool Medical School.
“One is now working as a junior doctor in a city hospital and we thought the Baltic Triangle would be a great place for her to start her professional life."
He said at “no stage” from the start of the project in 2017 until the end of November last year were investors informed of serious problems.
He added: “We can accept projects running into difficulties but the speed with which events unfolded have left a very bad feeling about the whole system from start to finish.
“It will be soul destroying to see the building finished thinking about what should have been. We feel totally let down.”
He said he now wants to see fractional development models “fully regulated”, starting with scrutiny of developers’ funding, clear conveyancing guidelines and transparent processes.
“We believed we were fully protected but this seems not to have been the case. We will now take steps to achieve legal redress.”
It’s the latest controversy surrounding the fractional sales model to hit Liverpool.
Over the past few years, the Liverpool Echo and BusinessLive have reported extensively on various failed or stalled city schemes where investors, many from the Far East, have feared losing their life savings due to failed developments.
Work began on the second phase of Parliament Residence in 2018, with millions of pounds pumped into the scheme by investors based all over the world - as far afield as China, the Middle East and USA.
It's set to deliver 145 one and two-bed apartments in the middle of the Baltic Triangle.
Investors in the scheme worth more than £20m allege they were not informed by Assetcorp that any difficulties or problems had arisen - and accused the firm of trying to “lure” additional monies.
An email seen by the ECHO sent in early December by Assetcorp’s managing director Stuart Johnson promised investors that building work would restart on January 7, and asked for payment towards completion costs, saying it would cost £3.8m to finish.
In a section laying out difficulties with the build including Covid infections and vandalism hitting the site, the letter to investors added: “We must emphasise that the scheme is still viable and fully solvent. The funding gap shortage does not put the scheme into a position of insolvency.”
It added that the firm was “purely interested” in delivering the apartments with no losses - despite it being “at a commercial loss as a company”.
The email was dated December 2, despite Companies House documents showing that David Currie had been appointed as a receiver for AC Parl St 2 Ltd just days before - on November 27. That move was in the hope of finding a buyer to recover Collateral’s investment.
Mr Hopkisson added: “It’s disgusting that Assetcorp and its [managing director] kept investors in the dark about financial problems while their building went on sale and bidders were invited to view it.”
A second man, an “experienced” investor who asked to remain anonymous, said he stands to lose “over £900,000” plus added market value.
He said: “That took a lifetime of hard work and smart investing. Our plan was to retire early, and use the income generated from the property.
“I was going to give a flat to each of my children. My daughter was looking to study in Liverpool.
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“Plans now have to change, retirement is not going to be early. I’m looking at another 10-plus years of hard work and recovery.”
It was the first time this individual had invested in off-plan property in the UK, but he had a stern warning for anyone thinking of doing the same.
“I won’t be doing this again and my advice to others is to stay away. I’m feeling pretty angry with myself for getting into this mess.
“The lesson learned is don’t buy anything that doesn’t yet exist.”
He said he was disappointed investors had not been given an opportunity to “organize and take over the project”, and that news of the sale was “sudden”.
“We have all been let down. Our contracts had no protections, we were poorly informed.
“Lets hope there is some justice in the UK and this is not business as usual."
Another investor, Luis Demelo, from Luxembourg, had invested his life savings - a total of £166,950 into the scheme - an amount that due to a serious illness, he will never be able to save up again.
Mr Demelo described his situation: “Personally, if I’m unable to get the money back, I will have lost 20 years of my savings that I won’t be able to recover as I have a serious chronic disease and my life expectancy is reduced. Also, my daughter won’t go to the University of Liverpool and I will leave her no financial support as I’m a single parent.”
He urged Legacie to work with him and others, to complete the development with existing investors - “even if that costs us a little extra money”.
A fourth investor, aged 60, said he had saved up the money by working in four countries.
He explained: “I thought to put all my savings into investment so my children could go to school. The eldest wants to be a doctor. He got a scholarship to study biochemistry at the University of Arizona.
“I put the entire money in this Parliament Residence phase 2. Total investment so far is £73,000.”
A fifth investor told the ECHO she had invested her pension and was “devastated”.
There is now hope that Legacie will be able to “find a way to help investors” - although it’s not known how that might happen.
A sixth investor expressed optimism, saying: “I hope Legacie is not only rescuing the building but will follow through their call to make this sector better regulated by finding a way to help the investors.
“It is shocking after so many people trusted in Liverpool that all of them found it so easy for their savings to disappear.”
When contacted for a comment by the ECHO last week, Legacie Developments confirmed it was close to securing the deal for the second phase of Parliament Residence.
A spokesman said: "We have put in a bid to rescue this development. It is currently in a dangerous condition from the damage that has been caused once the site stalled and requires significant investment, and the support of Legaice's expert team, to bring it to standard.
“Our vision is to create a quality residential development on this site so that Liverpool is not left with another stalled scheme. Legacie has a track record of delivery in Liverpool and so we hope to revive this project to make it something the city can be proud of."
When the ECHO put investors’ concerns to Legacie this week, the firm said it would be inappropriate to comment further.
Further attempts were made to contact Assetcorp and Mr Currie.
