A survey of almost 300 Harlequin investors suggests up to 95% were not made aware of the risks of investing in the troubled overseas property company by their agents or advisers.
In a survey of 292 investors by law firm Regulatory Legal, which acts on behalf of some Harlequin investors, just 5% said it was explained to them that, should they fail to pay the 70% balance due on their investment, they would lose their 30% deposit.
According to documents seen by IFAonline, Harlequin offered investors a "100% finance scheme". This included paying loan repayments plus interest until completion of the investment property if the investor borrowed the 30% deposit, followed by a 70% loan to value "guaranteed" mortgage.
However, only 1% of those who requested finance from Harlequin have received an offer of finance, according to the survey- and Harlequin has had problems paying interest payments on many of investors' borrowings.
According to Regulatory Legal, Harlequin Property now claims that the 100% finance scheme was merely an advertisement and not a representation or a promise.
However, of those investors asked, 96% said they relied on the finance being guaranteed, and 98% would not be able to complete without a mortgage.
Just under £400m has been invested into Harlequin Property, representing the 30% deposits.
Once the other 70% is considered - £933m - the contractual value of the Harlequin contract book is £1.33bn.
According to Regulatory Legal, just under 50% of contracts are now at or beyond completion date - despite a significant amount of the properties not being built - meaning investors face a contractual risk of £200m being subject to forfeiture.
In a statement Harlequin said: "Harlequin cannot be expected to comment on a survey undertaken by a third party, for which it has seen no evidence and which appears to be unsubstantiated.
"The vast majority of Harlequin investors are supportive of the company and the number apparently suggested by Regulatory Legal would represent less than 5%."
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