PROPERTY FRAUD IS ON THE RISE – HOW TO AVOID FALLING VICTIM TO ‘SOPHISTICATED’ SCAMMERS.

PROPERTY fraud could hit record levels in 2023 - because criminals are finding "increasingly sophisticated" ways to trick homeowners.

Property fraud is when someone attempts to gain ownership of a property by impersonating the registered owner, or by using forged documents to transfer the property into their own name. Once fraudsters acquire ownership of a property, they will sell it, or raise a mortgage on it.

The rise in successful crimes may be attributable to an improvement in available technologies. This is partly due to the Land Registration Act, which was introduced in 2002 with the aim of cutting out an old-fashioned paper process. Whilst many of the reforms have been beneficial, an open electronic register has encouraged fraudsters to take advantage of the system. 

Another major impact on climbing rates of property fraud is that since Covid it has become common practice to be able to purchase a property without meeting a mortgage broker, surveyor, or conveyancer in person as many are now working from home and all communication is done via emails and phone calls. This has made it even easier for fraudsters to infiltrate and impersonate one of the parties involved.

Empty houses or properties let to tenants are particularly vulnerable. Criminals will typically rent a vacant property and begin to intercept the landlord’s post before posing as the true owner and selling the house to a cash buyer. Often the Land Registry will be the first to recognize the crime, by which time it is usually too late.

Another common type of scam fraudsters use is to pretend to be buyers. They make an offer but withdraw before exchanging. Then they later use the information to forge documents and transfer the property into their names.

TYPES OF PROPERTY FRAUD

Property fraud can come in many forms, including:

• When a property is sold by someone who is not the legal owner.
• Property buyers being scammed into transferring money to the fraudster’s bank account.
• Property investment opportunities that are too good to be true.
• Quick sale companies who promise to buy your home fast, then dramatically drop the purchase price at the last minute .
  
     
  

WHICH HOME OWNERS ARE MOST AT RISK?

According to the   Gov.uk website  , you are more vulnerable to property fraud if:

• You have had your identity stolen
• Your property is rented out
• You live overseas
• Your property is empty
• Your property is mortgage-free
• Your property is not registered with HM Land Registry (HMLR).
   

The Land Registry is the definitive record of property ownership in England and Wales. If your name is on the Proprietorship Register of the Land Registry’s Official Copies, this effectively proves that you are the legal owner of that property. Digital records of your property’s title will be downloadable from the Land Registry if it was bought or mortgaged from 1998 onwards. You can check to see and download details of your property here .
 

If a fraudster manages to trick the professionals involved with a property transaction into believing that they are in fact the true owner of the property with a registered title, the fraudsters can then make off with the proceeds of sale. The innocent purchaser may have acquired valid title to the property, and the original owner could be left high and dry.
 
A fraudster will often take the following steps:

1. Identify a target property. The most frequently targeted properties are generally empty houses, rental properties, unmortgaged properties or properties where the owners are overseas.
2. Obtain fraudulent documents which will purport to “prove” that they have the identity of the property owner. Often this involves applying for a replacement driving licence / passport with a substituted photograph of themselves instead of the true owner. It could even involve applying to have their name changed to match that of the owner of the property. These documents can then be used to create a bank account.
3. The target property is advertised for sale and a solicitor instructed (using the fraudulent ID documents). The solicitor will be authorised to complete the transaction and to transfer the funds received from the purchaser into the fraudulently created bank account.
4. Almost immediately, the money will be transferred through a series of different bank accounts making the transaction trail very difficult to trace and leaving the true owner completely unaware that their property has been transferred to a new owner.

Intervening to stop this chain of events can be very difficult. While solicitors are required to satisfy themselves that their clients are who they say they are, if the documents presented to them have been fraudulently obtained and the photographs match the person giving instructions, even with due diligence, it is almost impossible to detect any wrongdoing.

SO WHAT CAN YOU DO?

Be careful about identity theft.

Due to the Money Laundering Act 2018 clients must produce their identity documents to their solicitor when buying or selling a home. At Graham Smith Property Lawyers we like to meet the clients in person, in our office, to verify their identity using original ID documents as we consider sending ID documentation via email high risk.

With modern technology and computer software, scanning any form of document whether it be passport, drivers’ license, bank statements, then sending them via email has its dangers.

Identity theft is a very serious problem, and can lead to all sorts of fraud. Once fraudsters have got a scanned copy of your passport, then can manipulate image and details to create a very similar, if not an identical copy. Your identity is one of your most valuable assets. If your identity is stolen, you can lose money and may find it difficult to get loans, credit cards or a mortgage.

As for what a person can do with your now with your stolen identity, this is enormous.

• Your name, address and date of birth provide enough information to create another ‘you’. An identity thief can use a number of methods to find out your personal information and will then use it to open bank accounts, take out credit cards and apply for state benefits in your name.
• Your stolen identity can be used to launder money and implicate you in crimes which you did not commit, like property fraud. It can also be used to create fraudulent companies.
• Your identity could be sold on to third parties so they too can implicate you in illegal transactions
• Your passport, drivers’ license and bank statements, are a very powerful documents, that is why we take great care in protecting you.

SAFEGUARDING AGAINST EMAIL HACKING

Email hacking is a method used by fraudsters to intercept emails between a person in the process of buying a property and that person’s conveyancing solicitor. The purpose of intercepting the emails is to alter bank details referred to in the correspondence, so that funds are transferred by the buyer to the fraudster’s account.

Here is how to protect yourself:

• Cross check any bank details sent to you via email with any sent in the post. If the bank details differ, ring your solicitor to query them.
• If you are told via email that bank details have changed, query this with your solicitor by phone.
• Do not use public Wi-Fi when exchanging emails regarding your property purchase; public Wi-Fi can be easier to hack into.
• Use strong passwords on your email accounts and ensure you have anti-virus protection on your devices.
  
   
  

IF YOU RENT OUT A PROPERTY OR OWN A HOLIDAY HOME

Make sure that the Land Registry has your up to date correspondence address, not the address of the property. You can register up to 10 addresses with the Land Registry including an email address.

OBTAIN A RESTRICTION AGAINST TITLE.

Whether you live or do not live at the property you can register a ‘restriction’ against the title. This means that no sale or re-mortgage of the property is to be registered without a certificate signed by a conveyancer, who is satisfied that the person who executed the document is the actual owner. There is no fee for this if you do not live in the property, but if you live in the property the registration fee will cost £40. Obtaining a restriction against title might be something worth considering while you are going through the conveyancing process.

SIGN UP TO THE LAND REGISTRY'S FREE PROPERTY ALERT SERVICE.

There are steps that a property owner can use to protect themselves from the likelihood of this happening.
 
If you are the owner of a property that is unmortgaged, you live abroad, have property sitting empty or rent out your property, then extra care should be taken as your property is at higher risk from this type of fraud.
 
As a property owner you should do the following to reduce your risk:
 
 

1. Check that your property is registered with the Land Registry. You will have to pay a £3 fee to access these documents. Properties that are least likely to be registered are those that were mortgaged or sold before 1990.
2. If your property is not registered, you will need to make an application for first registration using form FR1. The fee payable will depend on the value of the property. You can find this out by using the Land Registry’s fee calculator.
3. If your property is registered, ensure that your contact details on the Land Registry are where you are currently living. Often people make the mistake of their contact details being at the property itself which makes it easier for fraudsters to intercept letters or indeed for notifications of fraud to be sent to your property without you ever reading them.
4. Sign up to the Land Registry Property Alert Service. If you put an alert on your property and ensure that your contact details are up to date, the service will alert you by email when searches and applications are made against the property you are registered to receive updates from. This service does not block these applications but warns you that someone might be making them without your permission. This service is useful for landlords and individuals with property portfolios as it is possible to register and monitor up to 10 properties.
5. You can also put a restriction on the title deeds of your property which can stop HM Land Registry from registering a sale or mortgage on your property without the certification of a conveyancer or solicitor that the application was made by you. If you are a business owner or do not live at the property you can request the restrictions without paying a fee. If you live at the property, the fee is £40 and the application forms must be sent to HM Land Registry by post.

If you have any concerns in relation to this you should not hesitate in reporting the matter to the Land Registry (they have a Property Fraud line – 0300 006 7030), to Action Fraud and also to your local police. 

Please follow the link below to find out how you can protect yourself and you will receive an email if anyone attempts to deal with your property title. 

Protect your land and property from fraud - GOV.UK (www.gov.uk)

 
REMEMBER THE OLD PROVERB -  FOREWARNED IS FOREARMED (prior knowledge of possible dangers gives one a tactical advantage) and we suggest that you send your family and friends who own property this link so that they also can protect themselves.