The Nsw Department of Fair Trading will investigate a controversial property scheme that capitalises on the misery struggling homeowners in Sydney's mortgage belt in the property downturn.
Property Secrets buys "bargain" properties in Sydney's struggling outer-west suburbs that have been repossessed by banks during the property slump, and former housing commission properties, on behalf of investor clients.
The group then undertakes renovations on the properties and obtains rproperty valuations that come in well above the investor's outlay, encouraging clients to reinvest the difference in more depressed properties.
"Fair Trading Minister Diane Beamer has looked into the scheme to see if there are any breaches of the Fair Trading Act or any acts relating to property purchases," said a spokesman yesterday. "On the surface it seems that while it may not be illegal, there are moral questions you have to ask about this."
Property Secrets operates twice-weekly property investment tours of depressed suburbs such as Mount Druitt in Sydney's struggling western growth corridor, where home owners have been squeezed by the double-whammy of rising interest rates and plummeting house prices.
Property Secrets founder Paul Giezekamp would not respond to questions from The Australian yesterday. In a written statement the group said the company's conduct was in "strict compliance" with the Fair Trading Act.
"It is true that Property Secrets intends to purchase cheap properties in a depressed market from motivated sellers, but there is no public utility served by Property Secrets and investor clients staying away," the group said.
"The result is a rejuvenation of some of Sydney's poorest and most disadvantaged suburbs."
During a Property Secrets tour on Tuesday, attended by The Australian, Property Secrets consultant Jennifer Reeves told potential investors: "Nobody works out here so there's nothing else to do except breed and rent houses."
After Ms Reeves made the remark, The Australian was approached by a fellow Property Secrets consultant and told not to publish the statement.
Ms Reeves's comments, published yesterday, sparked debate on talkback radio, with Ms Beamer also weighing in on the controversy.
"As minister for Western Sydney I was extremely offended by the quotes attributed to this gentleman's property consultant," Ms Beamer said yesterday.
In a written statement from Property Secrets, Ms Reeves denied making those statements.
Later during Tuesday's Property Secrets tour - as printed in The Australian - Ms Reeves also said to investors: "Okay, so out here we put our blinkers on - we might not like what we see but it's okay, we're not living here and we get a nice tenant to move in."
Real estate consumer advocate Neil Jenman said buying properties for less than they had sold for was simply "opportunistic" and wise investing.
Source: The Australian
