Property fraud is on the rise, how are you protecting your assets?
10 September 2019
Fraud involves a person dishonestly and deliberately deceiving a victim for personal or financial gain and this can be in terms of property or money. Anyone can be a victim of fraud and every property owner should be aware of the increasingly sophisticated methods that fraudsters are using.
Examples of types of property fraud include:
- fraudsters using forged identification documents to impersonate the identity of the registered proprietor before selling or mortgaging a property;
- fraudsters tricking buyers into transferring money into the bank account of the fraudster, instead of that of the buyer’s solicitor/conveyancer, by intercepting and changing bank account details;
- property investment scams.
In September 2018, HM Land Registry stated that it had, since 2009, successfully prevented 279 fraudulent applications from being registered, with a saving in property value of more than £133.4 million.
Who are fraudsters targeting?
As the majority of property is now registered, information about it is open to the public and anyone can do a search at the HM Land Registry to establish who owns a property, whether it is mortgaged or not and even the price at which the property was originally purchased.
Whilst anyone with an interest in property can be the victim of property fraud, HM Land Registry has identified certain classes of property which may be particularly vulnerable to fraud. These include:
- unoccupied properties, whether residential or commercial;
- tenanted properties;
- high value properties without a mortgage;
- high value properties with a mortgage in favour of an individual living overseas;
- unregistered properties; and
- properties undergoing redevelopment.
HM Land Registry also notes that the following persons may be particularly at risk from fraudulent activity because, for example:
- they let the property or it is empty;
- they live overseas;
- they have already been the victim of identity fraud;
- they are a personal representative for a property where the owner has died and the property is to be sold;
- they are elderly.
While residential properties are more typically the subject of fraudulent activities, other types of property are not immune.
What can you do to reduce the risk?
The following practical steps can be taken to help reduce the risk of property fraud:
- Take care when receiving solicitor’s/conveyancer’s bank account details. If you receive bank details by email or post, you should always phone the firm to make sure these details are correct. Many firms provide clients with their bank details at the outset of a transaction (by post) and advise that those details will not change. Therefore, if you receive bank details which differ from those originally provided you should call the firm to verify the position (though it is prudent to call and check bank details in all circumstances).
- Take care when providing bank account details to your solicitor/conveyancer. The best advice would be to try to avoid sending your bank account details by email (to anyone); if possible, provide over the phone or in person. If circumstances are such that bank account details are to be sent by email, do not send them in a format (eg word) which a fraudster can more easily intercept and alter. Sending as a pdf attachment is a safer method.
- Choose your solicitor/conveyancer carefully. Check the lists compiled by (for a solicitor) the Law Society and Solicitors Regulation Authority; for licensed conveyancers, the Council for Licensed Conveyancers; and, for legal executives, the Chartered Institute of Legal Executives. It would be prudent to check the firm as well as the individual.
- Pay attention. Check all correspondence and documentation you receive carefully for any signs that the sender is not who he or she purports to be. In particular, watch out for inconsistencies or details that should arouse suspicion, eg inconsistent telephone or fax numbers or any change to an email address; letter heading or print containing spelling or typographical errors; no landline telephone number; calls being diverted to a call-back service; email addresses using generic email accounts such as Hotmail; and any change to details of the bank account to which monies are to be sent. Vigilance is key.
- Sign up for the Land Registry Property Alert Service. This is a free service offered by HM Land Registry. Once you have signed up, you will receive email alerts if someone tries to change the registered title to the relevant property. This service will not by itself block the transaction from being registered, but it will put you on alert so that you can seek further advice, or contact HM Land Registry, if you are concerned that the application is not bona fide. However, in November 2018, only 1 in 100 registered properties across England and Wales were using the service. For more details, see this page on HM Land Registry website.
- Ensure your contact details at HM Land Registry are up to date. This is a vital step in mitigating the risk of property fraud. HM Land Registry allows up to three addresses on the register (which can include an email address). If the property is to be left unoccupied for a significant period (eg redevelopment) you would be well advised to register another address(es) for service at a place where you can be reached.
- Register unregistered property. The risk of property fraud is elevated in respect of unregistered properties. If you are owner of one of the currently unregistered properties in England and Wales – and HM Land Registry estimates that, in 2016, there were around one million of such unregistered residential properties – you may wish to consider applying to HM Land Registry for voluntary registration. You will then be able to ensure that the property is properly recorded on HM Land Registry’s records with correct contact details for you, as registered proprietor. This should help to diminish the likelihood of risk of fraud.
- Suspicious behaviour. If you are being pressed to proceed to complete the transaction very quickly, you should (or you should instruct your solicitor to) seek to establish whether there is any feasible explanation. Fraudsters often use this tactic to try and influence decisions and to make sure that corners are cut. Very rapid completion in return for a bargain price is one approach sometimes adopted. Furthermore, mail solicitations claiming great returns, no matter how good they look, should be treated with great caution. If a deal seems too good to be true, then it probably is.
- Research. Never make property investments without thorough research and appropriate professional advice.
Whilst these measures are not exhaustive and cannot provide full protection, they can help fight against property fraud and reduce the risk of you becoming the next victim.
If, however, you are one of the unlucky victims of property fraud, or you think you are being targeted, you should contact HM Land Registry property fraud line on 0300 006 7030 (firstname.lastname@example.org). You can also get advice from Citizens Advice Bureau or an independent legal adviser as well as reporting it to Action Fraud.