Adviser warning over Brazil property scheme

The founder of Yorkshire-based Wealth Tree Consultancy said he was concerned that construction development company EcoHouse Group, which operates in the UK and Singapore, is not covered by the Financial Services Compensation Scheme, but offers protection to investors by holding funds in an ‘escrow’ facility, controlled by an independent lawyer.

A brochure for the investment, seen by Financial Adviser, states that EcoHouse Group’s first social housing development, Arco Iris, had seen every unit pre-sold before completion and investors’ funds being “returned within 12 months”.

EcoHouse Group also has another scheme in the pipeline, the Bosque development, with two phases already pre-sold.

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However, Mr Atkin said: “Irrespective of how good the investment opportunity is, the problem is that politics in these regions are very unstable and there is always a degree of uncertainty about what would happen if developments stall.

“Advisers must enter this area with the best realisation of all the possible outcomes, good and bad.”

Jason Purvor, international commercial director at EcoHouse Group, said: “This is a real estate transaction where clients buy an option to own a full constructed unit and capitalise on a government-backed social housing programme. The escrow facility is overseen by a third-party lawyer, who is regulated under the Solicitors Regulatory Authority.

“Our clients tend to be general real estate investors, who already have an alternative investment portfolio.”

Mr Purvor said investors had received their capital plus 20 per cent on the Arco Iris scheme, but the subsequent return on the Bosque development had been lowered to 15 per cent as a “commercial decision”.

The company now had sufficient capital to be looking at the next social housing project in the region, he added.