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The AFM warns investors against the risks of non-listed investment property

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The Netherlands Authority for the Financial Markets (AFM) is warning investors against the risks of investing in non-listed property investments. Many funds are in trouble.

Intensified supervision

The AFM has intensified its supervision of non-listed investment properties. The AFM recently further intensified its supervision on the basis of signs of incorrect valuation of investment properties, property fraud and a number of bankruptcies. The AFM observes that investors are often not informed of such matters. This means that they are in fact misled and lied to.

In order to be able to better supervise, the AFM developed the property risk radar, among other things. Any party trading in property, supervised by the AFM or not, is screened by means of risk indicators. This has identified 85 parties, whereby 25 of those were designated as high-risk. Eight property funds are currently under investigation.

In its approach, the AFM works closely together with the Tax and Customs Administration, which made a contribution to the property risk radar. It also cooperates with De Nederlandsche Bank during joint investigations and when implementing enforcement measures. In addition, information is exchanged via the Financial Expertise Centre (FEC). This allows supervisors to act more as a single government, which is often necessary in this sector.

Checklist

The AFM appeals to investors to report abuses to the AFM via the Financial Markets Information Line if they feel misled or defrauded. The AFM has also developed a checklist for property developers. It emphasises that it is important for investors to know what information about an investment property is essential and to demand this information. The checklist consists of a number of questions that help investors understand the risks of investing in property as much as possible. This checklist is available in Dutch only.

The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers’ and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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