In the past year alone, HM Land Registry prevented property fraud cases worth a staggering £31 million1.
This type of fraud does not refer to one scam, but a variety of different scams. Examples include title fraud (where someone steals a property owner’s identity, changing the property title from the actual owner to the criminal), intercepting payments, and even impersonating solicitors. Property fraud has wide-reaching consequences for its victims.
To help raise awareness, we submitted a Freedom of Information (FOI) request to HM Land Registry to reveal the prevalence of this scam and what to look out for.
HM Land Registry recorded 46 cases of attempted property fraud in 2021/22 compared to 25 cases of attempted property fraud in 2017/18, with an increase of 84% in just five years.
With the number of first-time buyers doubling at 98% in 20212 after the post-pandemic housing market boom, we could see even more people at risk of property fraud in the future.
Aside from the year 2019/2020, we can see that the number of attempted property frauds within the UK has continued to rise each year, increasing by 7% from 2021 to 2022.
Positively, however, HM Land Registry successfully prevented the registration of 44 fraudulent applications in the past year, worth more than £31 million3, according to their annual reports and account. While the number of cases might seem low, this figure details the staggering cost of property fraud.
Essentially, this refers to criminals attempting to change the property details from the correct owners to their details, and they attempt to do so via HM Land Registry. This is one of the most prevalent types of property fraud scams.
Further to the above, according to the Chartered Institute of Public Finance and Accountancy (CIPFA) 20204 report, ‘housing fraud’ accounted for more than half of the value of fraud they managed to detect and prevent. Other factors included:
Some examples of housing fraud within this report included illegally subletting properties (accounting for £31.6 million in 2019/20) and right to buy fraud (accounting for £30.7 million in the same period). In total, the value of housing fraud was £122.4 million that year.
Illegally subletting is when a person sublets their home without their landlord’s permission, or against what it says within their tenancy agreement. This is a very serious matter and can result in prosecution and loss of the property.
Right to buy is a scheme that allows tenants to buy their property for a discount after living in it for a qualifying period. But right to buy fraud refers to a type of fraud where the tenant deliberately misrepresents their circumstances to get that discount and exercise their right to buy. This could be from misrepresenting the length of tenancy or hiding any tenancy history, such as rent arrears.
When looking at fraud, the CIPFA estimates that £49 billion4 is lost to fraud every year as fraudsters become ‘increasingly sophisticated, making public services more vulnerable than ever.’
According to HM Land Registry’s website, “the state guarantee is HM Land Registry’s core function by which every property owner’s title is backed up by indemnity if a mistake is made in the register that causes loss.” In recent years, the most common mistake is the mistaken registration of a forged deed, such as a transfer or mortgage.
HM Land Registry Annual Reports and Accounts 2021-22 states that non-staff costs included £5.8 million3 in indemnity payments (including their legal costs and protection for victims against fraud or other errors) against 598 claims, which is an average of £9,792 per claim..
We spoke to Paula Higgins, CEO of property advice website, HomeOwners Alliance, to discuss common types of property fraud, and the actions we can take.
Paula Higgins said: “Property fraud is scary for homeowners. The consequences are so much more than losing a wallet or phone. We have a popular piece of advice on our site to help homeowners protect themselves from fraud. It's a no-brainer for anyone who owns a property to sign up to the Land Registry's free property monitoring service."
“Consumers who are in the process of buying or selling, it's crucial to choose your conveyancer wisely and ask questions around how secure their systems are. Property fraudsters bombard conveyancers around the time of exchange and completion to try to intercept payments."
“Consumers should be vigilant and familiarise themselves with the different types of property scams. Fraudsters have come a long way from sending random emails asking for help to get money out of another country. If it sounds like it's too good to be true, it probably is.”
HM Land Registry offer Property Alerts, which is one of their most effective fraud prevention measures. This involves receiving email alerts for any significant activity on a property you are monitoring, such as changing the details.
In the past year, there were 216,0623 new accounts created, which can help prevent or make you aware of any fraud on a property you own. If you feel your property could be at risk, we recommended signing up for the free service.
There are many different methods for fraudsters when it comes to property fraud but you should look out for anything suspicious. You can do so by signing up for the Property Alerts from HM Land Registry, which will email you when any significant activity occurs on your property or one you are monitoring.
Fraudsters may pretend to be a buyer and make an offer, which they subsequently withdraw before exchanging. They can then use the information they gathered during this process to change the title deeds on the property they were pretending to buy and commit title fraud.
This refers to stealing a property owner’s identity and changing the property title from the owner's name to the fraudster's name. As mentioned, they could do this as part of a ‘fake buyer’ scam.
Alternatively, they could use a Land Registry application and register a forged mortgage or transfer. Again, by signing up for Property Alerts, you will be alerted if such a significant change occurs on your property.
Criminals could also attempt to sell a property, or even mortgage a property, by using the owner’s stolen identity. There is much more risk to properties that are:
As mentioned above, any seller or buyer can sign up to Property Alerts to help monitor any suspicious activity.
Completions in the UK, typically, happen on a Friday afternoon. So, fraudsters can attempt to hack solicitor emails on those days and send you fake bank details.
If you notice the bank details are different from what you have seen before, contact your solicitor straight away. You should also be vigilant and contact them if you are due to make a payment to ensure it always goes to the right person.
Following on from the above, criminals could intercept your payments (such as your house deposit) by contacting you from a similar email address to that of your solicitor, which could mean you send your money to the wrong place.
Again, contact your solicitor before sending the money and double-check the bank details are correct, as this is a large sum of your hard-earned money.
Fraudsters can pose as conveyancers or pretend to be from an authorised firm by using the same letterheads or slightly changing the email addresses from the real email.
If you do receive correspondence regarding any properties that you do not recognise, please get in touch with Land Registry.
It’s also worth checking that there aren’t any firms impersonating your company, as criminals may be impersonating an existing company.
Fraudsters may offer you a chance to make money in property by buying properties that aren’t built yet, or at a heavily discounted price. You might be encouraged to invest a lot of your money, but those properties could be on land that is derelict or otherwise unsuitable for development.
You should always do your research on the company or area they are asking you to invest in. Speak to councils or locals to see if planning permission has been applied for and always double-check if it does seem too good to be true.
For more information on protecting your home and your finances, check out our blog.
Methodology:
Ocean Finance submitted a Freedom of information (FOI) request to HM Land Registry for the number of property fraud incidents in the last five years, as well as the number of attempted property frauds. FOI data was analysed in October 2022.
2 https://home.barclays/news/press-releases/2022/03/number-of-first-time-buyers-doubles/
4 https://www.cipfa.org/services/cipfa-solutions/fraud-and-corruption/fraud-and-corruption-tracker
Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.
Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.
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