Get-rich-quick guru in receivership
By Jonathan Chancellor and Lisa Pryor
November 26, 2003The property spruiker Henry Kaye, who claimed ordinary people could became millionaires with no deposit, has placed his investment property seminar company into receivership.
Signalling the demise of the get-rich-quick real estate seminar industry, the move coincides with Real Estate Institute of NSW data indicating that unit prices fell in 14 of Sydney’s 43 local government areas in the September quarter.
The figures show that price growth for Sydney units is stagnating, with median prices dropping 1.3 per cent over the quarter to $360,000. During the same period, Sydney house prices rose 1.1 per cent to $470,000.
The inner city has been the poorest performer in the unit market, recording a 5.3 per cent price drop over the quarter and only a 3 per cent rise over the year.
Outer Sydney was the best performer, with a 1.2 per cent rise over the quarter, and a 22.1 per cent jump over the year.
The president of the institute, Rowen Kelly, said the results confirmed that the NSW property market had reached a plateau over recent months, returning to more typical conditions after a protracted period of exceptional growth.
Regional areas are experiencing much faster price growth than Sydney, with annual rates of more than 30 per cent in the Illawarra and Hunter.
A Residex spokesman, John Edwards, said the strength of regional property prices was being fuelled by city investors seeking low-cost properties with high rental returns.
“We believe it’s caused by investors who have gained substantial amounts of increased equity in their homes in the Sydney and Melbourne markets and fairly freely available credit policies of the banks,” he said.
Many areas within Sydney are still experiencing strong growth, with median house prices in Wollondilly, Holroyd and Drummoyne growing by more than 20 per cent in 12 months.
Mr Kaye, blamed for encouraging risky investment in increasingly overheated capital city unit markets, had attracted more than 100,000 people to his speculative investment seminars over the past two years.
The National Investment Institute, which staged the seminars, grossed $15.8 million in revenues, its last annual return outlined.
But the cash flow dried up about five weeks ago, its receiver, Mr Andrew McLellan, said yesterday.
“Not only was there the cash flow problem, but many people wanted their money back, with potential claims standing at possibly $10 million,” he said.
People who attended Mr Kaye’s seminars were signed up by 80 now-retrenched spruikers who door-knocked and cold-called for clients, who typically paid $15,000 for the course.
They then spent $5000 to source so-called discount properties, often via other Kaye companies.
With courses running up to 18 months, many of the participants made periodic seminar payments, with about 2000 attendees still owing $15 million, Mr McClellan said.
Mr Kaye claimed ordinary people could became “property millionaires with no money down, no equity, no debt and a price protection guarantee”.
The Australian Competition and Consumer Commission, Australian Securities and Investments Commission and Reserve Bank were making business difficult for Mr Kaye.
In July this year, Mr Kaye gave an undertaking to the court that he would offer refunds to clients who had attended his courses based on false claims that the courses were approved by the ASIC.
The initial creditors’ meeting will be held next Tuesday.
This story was found at: http://www.smh.com.au/articles/2003/11/25/1069522606435.html
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