Legal action launched over failed Leicester student property investment

Private property investors have launched a legal claim against a law firm and insurance broker after deposits worth £6.8m were lost when a student accommodation development failed.

Over 170 individuals, including some who invested their life savings, lost between £21,000 and £300,000 when the developer behind the Enterprise House scheme in Leicester city centre went into liquidation during 2014.

The investors argue they were advised negligently prior to the investment and have commenced a claim against Strathearn Insurance Services (‘Strathearn’), Wilsons Solicitors (2007) and Law Offices UK Limited (both trading as ‘Wilsons Solicitors’). These businesses were recommended by IPIN Global Capital, the company marketing Enterprise House, and acted for the investors in the scheme.

The case centres on advice from both the solicitors and the brokers that a bond provided by Northern and Western Insurance Company (NWIC) ensured investors would still be able to reclaim their deposits should the development fail.

However, neither Strathearn nor Wilsons Solicitors informed investors that NWIC was unrated, of questionable financial standing and unregulated in the UK, being registered in the Caribbean island of Nevis. This meant assurances regarding deposits were essentially worthless.

After the property developers went into liquidation and NWIC also became insolvent, investors realised there was no possibility of claiming on the insurance they thought was in place.

The Professional Negligence team at Your Legal Friend is now acting for the largest cohort of Enterprise House investors who have lost over £2m as a result of the negligent advice they received.

Your Legal Friend’s Enterprise House client group will contend that Strathearn breached their statutory duty in recommending an unsuitable insurance product to the investors and may have negligently misled them in promotional materials distributed prior to the investment.

The group will also contend that Wilsons Solicitors were negligent in failing to carry out sufficient enquiries into the viability of NWIC, the suitability of the bonds provided or the contract paperwork.

Furthermore, they will say that the firm was unable to act independently and in the investors’ best interests in view of its role within the overall investment scheme, and, that the firm breached the Solicitors’ Regulation Authority’s rules in its handling of the investors’ deposit monies.

Claire Critchley, head of department for financial, property and professional claims at Your Legal Friend, said: “Enterprise House presented an attractive opportunity with an advertised 36-month turnaround and projected returns of as much as 22.5% of the initial investment.

“Investment is never without risk, which is why the investors relied on Strathearn Insurance Services and Wilsons Solicitors to ensure all parties involved were regulated, the agreements were sound and that ultimately their money was safe.

“It’s clear that in this case neither firm was in a position to fully advise their clients. The trust investors placed in the regulated status of these firms, their advisory credentials and professional judgement was misplaced, which has led to serious financial and emotional consequences.

“We’ll be pursuing this case vigorously on behalf of investors and will look to recover the deposits our clients paid, as well as other losses they have incurred. Other individuals who are yet to join the action have a limited time in which to do so. They must have joined the claim before the expiry of six years from the date the contracts were exchanged on their investment in order to bring their claim.”

Enterprise House was marketed as a mixed-use development in Leicester city centre that would have replaced the city’s derelict International Hotel. Plans included 454 rooms for students as well as shops, cafes, a gym and commercial units.

The land has changed hands several times and Your Legal Friend understand the current owners, LandInvest Ltd, also intend to use the existing planning permission to create the original mixed-use development.