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Investing in car parks: a good vehicle for income seekers?

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Written by:
01/02/2015
As the search for income continues, many investors are turning to alternatives, with car parks becoming increasingly popular.

If you could find an investment guaranteeing 8% and based on ‘hard’ assets would you be interested?

With interest rates relentlessly hovering around zero, you probably would, but you might not immediately think of car parks as the place to look.

A growing number of disillusioned savers are choosing to put ‘non-traditional’ investments into their Self-Invested Personal Pension (SIPPs) and car park spaces are among the more left-field examples.

The rationale behind the idea is that as the number of cars increases – motor organisations say there will be 39 million more vehicles on British roads alone by 2030 – demand for parking will soar. However, as there is only a finite amount of space in urban areas for car parks, demand is expected to handsomely outstrip supply.

Investors can take advantage of this trend by purchasing an individual parking space and leasing it out to a tenant for a period of time. Often this tenant is a management company which then sub-leases it to customers on an annual basis.

Car park spaces can typically be purchased with a minimum investment of £25,000 for a six year lease and most offer a guaranteed rental yield of 8% for the first two years.

These investments are being pitched as a low entry level way of investing in commercial property and are marketed as ‘tax efficient’ and ‘purchasable through SIPPs’.

Like any property investment, selecting the right location for your space is crucial. Places where demand for parking is at a premium because of weather conditions have proved popular in the past. For example, hot Dubai or rainy Manchester.

Property investment company, Platinum Knight, says investors can earn on average 9% per year by investing in a car park project in Dubai. It promises returns paid direct every six months which rise in each of the first five years.

Intelligent Investment offers parking spaces in central Manchester and, according to its website, guarantees a minimum rental return of 8%, which is projected to increase to 12% from year 5.

With eye-catching rates, investing in parking spaces may seem appealing but those interested should proceed with caution.

Importantly, while promoters of car park spaces claim they are ‘SIPP-approved’, investors shouldn’t automatically assume their SIPP provider will accept them.

Car park spaces may be eligible to be held within a SIPP under HMRC rules – as long as they are used for commercial purposes only – but providers can chose to reject them for a number of reasons.

AJ Bell, one of the major players in the UK SIPP provider space, says it has received a few enquiries regarding these schemes but has chosen not to permit them.

Technical resources manager, Gareth James, says: “In the examples we’ve seen the leases offered upon investment have been fairly short term and within that term there has been an even shorter period during which income is guaranteed.

“We’ve also not been satisfied that the investments are sufficiently liquid in the event that the SIPP has to sell them, or that the investment can easily be valued on an ongoing basis.”

Dentons, another SIPP provider, would also not permit them.

Director of technical services, Martin Tilley, says: “These are unregulated investments so you should treat marketing literature as being fake until it can be verified independently it is accurate.”

Taking a trip to Dubai to make sure the parking space actually exists, for example, would be way beyond most investors.

Tilley continues: “I’d also be concerned about what happens after the guaranteed income period runs out as well as the administrative costs.”

By contrast, provider James Hay would in principle accept them, although the firm has yet to do so.

Head of technical support, Neil MacGillivray, says: “Car park spaces are like any piece of land so should be SIPP-able.”

Problems arise if the space is near the investor’s own home because if it were used for non-commercial use, it would be taxable within a SIPP.

MacGillivray adds: “We would consider it as long as it were in a commercial car park. But it would be on a case by case basis.”

Des O’Hara of alternative investment advisory firm, Everett James, has recommended car parks to his clients in the past. He calls them a “reasonably safe” way of diversifying and spreading out risk in a portfolio.

When it comes to consent from SIPPs, he has had mixed experiences.

“They [providers] are constantly changing what they will and will not accept. There doesn’t appear much uniformity; one provider may accept a product this week that they never last week whilst another SIPP may now refuse that very same product.

“Challenging I guess would be the best description but we simply manage that process. If a client has a broad, diverse spread we must ensure their particular SIPP provider accepts every product or it’s back to the drawing board really.”

There are 92 Comment(s)

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  • YourParkingSpace

    For an idea of rental prices you can search on our site: https://www.yourparkingspace.co.uk

  • Mario Miniaci

    Any comments from people who have invested in this kind of vehicle? I get the impression there’s an element of ‘too good to be true’ from many possible investors.

    • Digby

      The Store First model is that you get a guaranteed income for the first 2 years, with the same projected rises. However they sublet back from you and I have friends who’ve just had the lease terminated at the end of the 2nd year, so good bye to the guaranteed income. Plus the guaranteed buy back is at the company’s discretion so read the small print carefully. My friend now owns a 175 year lease on storage units that he can’t sell and is dependent on the company letting out on his behalf.

    • John Wilson

      Avoid anything to do with Toby Whittaker and Group First.

    • John Wilson

      Avoid losing your money to these shysters by steering clear.

  • We have had real positive responses from those that have invested through http://www.carparkinvestments.co.uk

    • Randal Gossip

      This just an offer of investment no real comments from investors .!

  • Claire

    Has anyone come into year 3 of their car park investment when the guarantee is no longer applicable?
    I have to spots at Glasgow and they’ve been ok, but it’s early days, only had them a year. I’m thinking of buying more but not sure as it’s early days.
    Any comments thanks

    • RosiesMum

      Hi Claire, I’ve inherited 3 of these car park spaces after the passing of my dad. If you want to discuss further please email me on gmehigan@hotmail.co.uk
      Gillian

    • Peter Dick

      Dont know

      • Claire

        Hi Peter.
        What’s your changed deal? Did you but with Group First?
        I bought mine through direct property investments, I haven’t had any money since August last year, but the first two years are paid in advance and the second two in arrears. I’m hoping for a payment this month ?

        • Peter Dick

          Hi Claire
          We got letter stating the lease had changed.

  • PeterP

    I have bought some spaces at Gatwick from an agent company called Direct Parking Investment. I understand the purchase money goes to a company called Group First.Same scheme offers as above, 8%, then 10%, then 12% and 175 year lease. I was thinking of purchasing more but I am rethinking the whole thing now after reading this article. I also searched the fca.org.uk/register but I could not find the companies names. Anyone know anything about these companies?

    • ken

      Please beware you will lose your money not worth the risk I was a broker selling these

    • RosiesMum

      Hi Peter, I’ve inherited 3 of these car park spaces after my father passed away last year. Could you please email me on gmehigan@hotmail.co.uk and we can talk further
      Gillian

  • bongedtwo

    My question is not so much about the rent.

    I leased a parking space in a secured area of a former NCP car park in Feltham near Heathrow for 1000 years (lol). I paid 3.5k around 8 years ago for it.

    I’m in need of money for it now but I don’t know how to value it. I’m on the doorstep of Feltham mainline station into London Waterloo.

    Does anybody have advice on how to proceed?

    Rgrds

  • Randal Gossip

    I invested and received the 8% as promised for the 2 years . The money is paid however from those who are investing not rental . This rental is paid every 3 months so I expect some payment soon . What I can say is that they are slow ,after 2 years I still have not got the Land Registry details. I get e mails that the office manager is on vacation when she is not etc . I expect if you want to sell it can years if ever I begin to wonder ?

    • RosiesMum

      Hi Randal,
      I have inherited 2 of these spaces after my father passed away recently. I’m shocked that he would invest in something like this because he preferred “safe” investments. He purchased through Park First, is that who you bought from too? Did they call you out of the blue?

      • Randal Gossip

        I bought 1 space through a broker and it was not a cold call .The rent is supposed to be paid every 3 months . I have not been paid any rent after 4 months at this stage . I am interested to know the position of those who have invested earlier .

        • RosiesMum

          Hi Randall,
          Thanks for replying. My dad bought the spaces July last year.

        • ken

          Do not purchase this investment my father did and he has received no income after year 2.

          Looks like a scam ponzi scheme

          • RosiesMum

            Hi Ken, I’m trying to get hold of anyone who has invested in these car park schemes. Could you email me on gmehigan@hotmail.co.uk
            Gillian

          • Clare Cryne

            Gi

          • Clare Cryne

            Wh

          • Clare Cryne

            Ro

          • RosiesMum

            Dear Ken,
            Please email me on gmehigan@hotmail.co.uk
            I inherited 3 spaces after my dad passed away last year. I have serous concerns and would like to discuss more
            Gillian

          • Clare Cryne

            Pl

          • Clare Cryne

            Pl

          • Clare Cryne

            Ho

        • Clare Cryne

          PPP

          • Randal Gossip

            I saw that year 3 investors got paid . I am in my third year and got an e mail that rents are now paid in December . I sent an a email about selling the space as expected no reply .There is a lot of negative publicity about them, the Director Toby Whiticker went bankrupt before .

        • Clare Cryne

          Yesterday

      • Clare Cryne

        I al

      • Clare Cryne

        I b

        • Peter Dick

          Clare do you know anything about the Park first investment.

      • Peter Dick

        removed

  • Clare Cryne

    I b

  • Clare Cryne

    Is

  • Randal Gossip

    I got a letter from Group First that rentals will be paid in December . I also have the HMRC who have allocated me a UTR number for tax as a non resident .Any broker saying its tax free is lying .You can bet if the scheme fails any tax paid is a loss too .

    • Peter Dick

      Have you had correspondence recently from park first changing the terms and conditions of the lease.

      • Randal Gossip

        Yes I got the details after a phone call . The representative said that after a year you can sell back the space if you remain invested . I think he was just making that up .

  • Peter Dick

    I have just had a letter from Park First saying the agreement has changed and offering a 175 year lease and the chance of a refund after a year less the money that was supposedly paid in rental but is now coming off the capital sum.

    • Catriona

      Hi I have just received this letter too. Would be interested to keep in touch to see how it pans out – there are no numbers with this letter just draft contracts… Thanks Catriona

      • Peter Dick

        Hi Catriona

        I called the company this morning

        • Gee

          Hi. I’ve received the same. Would be good if we can all get together to understand our position. I’ve sent you a mail Peter so hope you don’t mind. Feeling a little confused and concerned

        • John Wilson

          This firm Group First are like no other I’ve encountered, they employ dodgy fly by night brokers then deny any connection to them. They don’t answer any questions, if you call you deal with receptionists who reiterate the company mantra. Anyone deal with a crook called James Forde? Yes, we need to form a group. How can we go about that?

  • Peter Dick

    Removed

    • Gee

      Yes I think that would be best. I’m very interested. Especially as we have only have about 2 weeks to make the decision baring in mind its Xmas. A group has more influence than individuals…

      • Peter Dick

        removed

        • Gee

          Did that other person Catriona get in touch? What’s your thoughts on this? I personally think whichever option we choose we will loose. It’s knowing which option we will loose the least and expose us least.. I had a long chat with one of their staff and didn’t get any sense of Warm feeling.

          • Peter Dick

            removed

          • Gee

            Where are you based? Shall we have a chat even on the phone? I’m divided. Go into long lease and get some more money back and then loose or sell. Either way I think the company will fold and then they will sell our plots at much lower rate.

          • Peter Dick

            removed

          • Gee

            Yes I saw that article… who which solicitor will you use to sell?

          • John Wilson

            I’m using Bryden Crearie, ‭0141 227 8200‬ They seem ok, to early to tell but had to find a Scots firm. It seems to have moved along a bit. Can’t help feeling pessimistic knowing Group First to be complete scoundrels. I would consider it a triumph getting any money out of their clutches and back to me, we’ll see.

          • Steven Coverdale

            I think that they’re trying to keep the wheels on the wagon so that they can keep investors money rolling in. Maybe that’s why ..there’s a delay on returning the money, so that people like ourselves don’t rock the boat too much.

          • John Wilson

            The “staff “ are as unhelpful as possible, it’s how they have been trained. I am never put through to anyone in charge. Any communication with Group First is a frustrating waste of time.

        • Steven Coverdale

          I have a list of every investor and their addresses in the Gatwick Car park scheme. Only about 30% are UK investors. The local council sent this info out when they had a dispute with Parkfirst , much to their annoyance, im sure.

  • Steven Coverdale

    Hi. I have just received all of the spiel everyone’s talking about. Basically, sell your plots and you’ve earned 2% because you give up your guaranteed income, or take a lifetime lease and earn 2% less your ground rent + maybe a dividend( not guaranteed). My thoughts are , take the money and run. They’ve already been slippery enough to break every part of their sales pitch ,ie you will earn 8% for 2 years with projected earnings above 10% after that. I don’t believe this firm can be trusted to look after people who have put a lot of their trust and hard earned cash in their hands. When I spoke to Parkfirst, the guy admitted they’ve had a lot of complaints and couldn’t really give any straight answers to my queries.
    If I manage to extract my investment in one piece, I will be relieved and will have been taught a valuable lesson.

    • Claire

      I agree. I’m on year 3 of my car parks. I spoke to them on the phone about selling, and basically they said, if you sell we will give you back your money minus the rent we paid you over the last 2 years, so where I paid 40k I will get 33k back !!
      It appears it was a ponzi scheme after all..
      Also you pay for your own solicitor now for conveyancing..

      • Steven Coverdale

        Hi Claire. You can message me on s.coverdale@yahoo.com

        • John Wilson

          Hi Steven, I will be in touch.

      • John Wilson

        Hi Clair, I am taking the opportunity to just get out with any money at all. I still got phone calls from odious representatives with more bs trying to deter me from selling. Anyone know who forced them to do this? Giving any money back at all is contrary to their business plan.

        • Debbie Tucker

          My solicitor has advised not to enter lifetime lease and not buy back agreement which she feels will be expensive and difficult to enforce as it was with cophall parking not group first. Advice is to sell independently.
          Debbie Tucker

          • John Wilson

            Good luck with your sale. I know you can’t give the storage pods away!

    • Graham B Broadhead

      I am in the same position i want to retrieve my money asap and would like to keep in touch with others in the same situation

      • Steven Coverdale

        Hi Graham. Totally agree. You can message me on s.coverdale@yahoo.com

        • John Wilson

          Hi Steven, emailed you yesterday.

      • John Wilson

        Hi Graham, can we not set up a face book or another type of group? I’m hopeless at IT but do think a group is a good idea.

      • John Wilson

        I had some correspondence from the Glasgow based firm I am having to use. I have been reminded that Group First will take 12 months to return my money minus any rental I have received. I haven’t been told when the 12 month period starts from. Group First will do anything rather than give money back I feel. As I have said one of their “agents” rang me three times trying to dissuade me from selling. When I maintained my stance that I wished to sell he told me, in a nasty way that he guaranteedI would get nothing for 12 months, not a penny we’re his words. This company seems at war with its investors. If I get anything back, ever fro thisconman Toby Whittaker. I will be amazed.

    • John Wilson

      Steven, Those are exactly my thoughts.

  • Randal Gossip

    I notice a number of Introducers are now selling the spaces in Glasgow for £25000 .Remains to be seen how many can be sold .

    • John Wilson

      I doubt if anyone will buy them, hope I’m wrong.

  • John Wilson

    Avoid anything to do with Group First or Toby Whittaker.

  • John Wilson

    Yes Group First and Toby Whittaker, what a shower. I see they have been told to wind up some storage sites but have appealed so it will be August this will go to court. I am in the process of selling back my Glasgow parking space for a loss even if it goes through. I am having to use a Scottish solicitor, wont be cheap. If anyone wants to use this firm I would be happy to pass on their details. Also if any investors wish to contact me they can- jcw_redhut@yahoo.co.uk

    • Charles Orr-Ewing

      Interested in the solicitors’ name please. Undecided whether to play Park First’s game but time running so indication of costs would be useful. I endorse every single caveat about Whitaker and his team; categorically not to be trusted in any respect; dangerous and duplicitous. A lot of innocent people have lost and will continue to loose their life savings etc due to a series of crafty schemes which are not readily understood unless people pay a small fortune to go to solicitors from the outset. Do not touch with barge pole is my very sincere advice and do not take any single comment at face value.

      • John Wilson

        I’ve posted the firm I’m using.

        • Charles Orr-Ewing

          Do you know if anyone or their solicitor has a soundly based view as to whether the Park First position of forcing investors to opt for one or other of their variously unattractive positions after creating the illegal collective investment scheme is actually legal ? Quite a lot of their current positioning seems to be about trying to make sure they do not get sued (on a large scale) for the FCA debacle. If the ‘offer’ of options (patently designed to further boost its coffers at investors’ expense) is declared illegal where does that leave us ? Also, my Park First paperwork has several Store First references so if there is underlying linkage between the two companies within the Group and if the pending Government Store First action succeeds causing Store First to cease trading will that also give TSW the excuse he presumably wants to not honour his clearly stated intention (see Park First’s most recent accounts at Companies House, signed March 2018) of paying Park First investors ? This feeling of continually being manipulated around to line other people’s pockets has a distinctly nasty smell about it and I sincerely hope will deter other potential investors from parting with a single penny to at Group First Global enterprise.

  • Colin Gray

    I am the third year of my Glasgow car park investment and like all investors, i hope have received there 8% for year one & two & 10% for last year which i was reasonably happy with, am i being naive about Park First after reading all the comments on this page i’m beginning to think so. After that i read a few articles on Group First and especially Store First which does seems to be ponzi scheme.
    When i was sent the information pack informing me about new lifetime lease back i contacted the FCA and asked them about Park First they informed me that they were aware of Park First but at present had no plans to investigate them. So i’m unsure of what to do for the best, car parking in it’s self should be a reasonable investment. Park First had the choice of breaking the contract after the initial two years like Store First did with the pod’s but chose to continue the contract guaranteeing 10% for years three and four. Which must mean there is money to be made, if the FCA contacted Park First about the long term lease and are not investigating them then they must be reasonably happy with how the business is going. But then there is Toby Whittaker. If any one can add any comments i would be grateful.

  • Randal Gossip

    I suggest anyone looking for a possible solicitor or join a group contact Peter Dick at pwdick54@me.com . He has been quiet for a few months however .

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