Investors seeking out higher returns through the property market are being left exposed by firms that are hiding the considerable risks.
Research conducted by Which?, the consumer group, seen exclusively by Telegraph Money, revealed how unregulated property schemes are misleading investors.
Ordinary investors are often drawn to property as an investment because of a belief that the asset class is more straightforward than shares or bond markets.
Which? singled out four companies - Flambard Williams, Fresh Invest, Select Property Group and Seven Capital - which appeared prominently in Google advertising when users searched for "property investment" during October and November.
A mystery shopping exercise of the firms, posing as potential investors with around £225,000, found the firms claimed there was minimal or no risk in investing and claimed property was a better place for their money than a bank account.
In the worst case, Seven Capital, a developer that offers the chance to purchase buy-to-let properties off-plan, told the caller there was essentially "no risk" involved in investing.
In an investment guide for developments in Birmingham the developer projected rental yields at 7pc and a 20pc rise in capital values during the build.
A spokesman said it would "never intentionally mislead our clients into thinking property investment is completely without risk".
A call handler for Flambard Williams, which matches investors with buy-to-let schemes, implied it was safer to invest in property than the stock market, which could "go up and down [and] could crash".
A spokesman said property "is the best investment vehicle over the medium to longer term" and said the chance of property losing all value is very low.
Another firm focused on off-plan buy-to-let properties, Select Property Group, waved away the caller's fears of properties dropping in value. It said that if values fell as long as the properties were occupied by tenants, investors could just "ride it out" until the market improved.
A spokesman for the company said it has a "vested interested" in the long-term performance of its investments as it is responsible for their management.
Of the four companies tested, Which? said Fresh Invest was the most responsible in clearly setting out the risks facing investors. It conceded property prices could fall and there might be gaps in the tenancy of rented properties.
However, Which? said the firm still downplayed how much research an investor should do before buying a property.
Harry Rose, Which? Money editor, said: "If you’re investing in unregulated schemes such as these, it’s you - the investor, that really takes on the risk. As our research highlights, there simply aren’t the safeguards in place as you would get with regulated companies which are required to be clear, fair and not misleading.
"Unless you’re willing to do thorough research and are aware of the risks, unregulated property investments like these are to be avoided."
Investing through unregulated firms does not provide protection under the Financial Services Compensation Scheme.
FSCS payouts vary but are capped depending on the financial product. For instance, deposits are protected up to £75,000 per account in the event the bank goes into default, while investments are capped at £50,000 per person per firm.
Have you been stung by an unregulated property investment? Let us know: sam.brodbeck@telegraph.co.uk