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14-05-2024

The Trojan Horse in Property Dealings: Unveiling the Dangers of Property Fraud

For most people, buying a property is likely to be the single most important investment that you will make during your lifetime. It needs to be protected.

The scale of fraud committed in the UK rose to £2.3bn in 2023, with illicit activities relating to the sale, purchase or mortgage of properties accounting for 71% of all fraud. In fact, the UK Land Registry has received over double the number of fraud claims that they have prevented.

These damming statistics show that fraudsters are becoming increasingly convincing and more successful in their attempts to deprive homeowners of their property.

The ever-increasing refinement of technology means that these scams can be unpredictable and occur in a variety of ways. This article will delve into the main types of property fraud and shed some light on how you can protect your investment from potential threats.

Title Fraud

Title fraud occurs when a scammer gathers sufficient information about a property owner allowing them to steal their identity. Using this information, they then are able to sell the property and make off with the funds or may even apply for loans by using the property as collateral.

Those most at risk from being the victims of title fraud are the people who own properties that are currently vacant such as holiday homes which are uninhabited for a majority of the year, or properties that are unregistered.

Vacant properties are a haven for fraudsters as the chance of a homeowner discovering any illicit activity is severely reduced due to the property not being their main residence. Recent targets have been the elderly who may have gone into a care home, leaving their home vacant.

How can you protect yourself?

There are multiple ways a prudent homeowner can protect themselves against title fraud. If your property is unregistered, then contact a solicitor who will begin the registration process and ensure that your name is on the title deeds thus legally registering you as the owner of the property.

If your property is already registered, then you can download an official copy of the Register of Title at a cost of only £3 from the Land Registry. The Register will state who the true owner of the property is and will inform you if there are any mistakes or incorrect information regarding your property. If there are mistakes, then you must contact the Land Registry so that they may rectify the issue.

All homeowners are actively being encouraged to sign up with the Land Registry Property Alert Service which will alert you immediately if there are any official searches or applications submitted against your property. If you receive an alert that you have no knowledge of or did not authorise, then you can immediately address this to prevent any fraud from occurring.

While the above protections are a good start, the most secure method to protect your property is to place a restriction on the Register of Title. A restriction blocks the Land Registry from registering a sale or mortgage of your property without the certified consent of a solicitor, such consent can only be provided on your behalf. The fee for registering a restriction is £40 and must be done via post. A small price to pay for extra safeguards on your home.

Cyber Fraud

Cyber Fraud differs from title fraud as here, the wrongdoer impersonates the conveyancer dealing with the property rather than the homeowner. Fraudsters are utilising the fast-growing technology at their disposal to create fake emails, letters and websites that seem perfectly legitimate and look as professional as the real deal.

The authenticity of these fraudulent documents can convince unsuspecting buyers to part with their money thinking that they are purchasing a new home only for the funds to disappear and never be seen again. Fraudsters may create a false conveyancing firm, or they may intercept email communications between a genuine conveyancer and buyer and request that the buyer transfer the purchase funds directly to a new bank account.

How can you protect yourself?

At the beginning of the property transaction, it is essential that you speak to your solicitor in person or on the phone. At that point it would be pragmatic to confirm each other’s bank details. At a later date, if you receive instructions from your solicitor that they have changed their details, this may be a fraudulent attempt by a wrongdoer to exploit payment from you. If this occurs, contact your solicitor using the phone number you have previously used to communicate. Ensure you speak to the same person you normally deal with and confirm if they really have changed their details.

Any time you are required to transfer sums to the solicitor, always call and double or even triple check. The risk of fraud is high so solicitors are understanding of the lengths one may go to protect themselves. A quick phone call to confirm is a small step to take to mitigate potential fraud.

Another method of protection is to set strong unique passwords for your email account to make it much safer. This should be coupled with two-factor authentication, thus guaranteeing the best possible security.

Lender Fraud

Lender fraud entails the impersonation of a mortgage lender, such as a bank or building society. Fraudsters will offer a homeowner the opportunity to renegotiate mortgage terms that are more favourable to the buyer. In return the false lender will demand an upfront payment that is lower than the amount still to be paid on the mortgage, enticing owners to comply thinking that they are getting a great deal. Consequently, the false lender vanishes with the payment and the terms of the mortgage stay as is. All documents and correspondence from the fraudster will look and feel completely legitimate, giving homeowners a false sense of security. Those who are in financial distress are most at risk of being targeted and suffering this type of property fraud.

How can you protect yourself?

The majority of lenders are companies, and all will be registered with the Registrar of Companies. If you receive communications from someone claiming to be a lender, check the Registrar to verify their authenticity. There is a link on the Registrar that will take you to the lender’s legitimate website. From there, you can find their customer support contact phone number and speak to someone to confirm if the communication your received were genuine, or the work of a scammer.

Lastly, remember that the most important form of protection is for you to always remain vigilant. If something seems suspicious, it is worth taking the time to verify it. If you are offered something that seems too good to be true, take action to confirm the source of the offer. Potential threats can arise from all angles and fraudsters are always innovating their methods of attack. Your property will often be your most valuable and treasured asset. Ensure that it receives the protection and attention that it deserves.

Contacts:

If you would like to discuss any of the issues raised in this article, or need general advice about property related matters, please do not hesitate to contact our Property Department  on 020 7625 6003 or Gary Green (Head of Property) by email at g.green@fgdlaw.co.uk