As per the Nation Crime Agency’s ‘Strategic Assessment of Serious and Organised Crime’, which was released in May of this year, fraud remains the most common type of crime in England and Wales.
It is estimated that in 2020 alone, the cost of this type of crime in the UK was over £3 billion, affecting at least 3.5 million victims, although the true figure may be much higher than this with much going unreported.
Fraud extends to every area of life but is most common in high value transactions, with conveyancing being particularly attractive to criminals.
In property matters, fraud most commonly takes two forms; fraudulent transfers and registrations or ‘Payment Diversion Fraud’.
Fraudulent transfers and registrations are the more dramatic of the two, making the news with headlines such as ‘Luton man left shocked as his house is stolen’. In this instance, the victim returned from a work trip to find the locks changed and someone else living in his house. Fraudulent identification had been used to impersonate him and sell the house, with the proceeds going to the criminal. Due to the surrounding law, it is possible that the new buyer will remain the legal owner of the property, having purchased it in good faith, although the final outcome is still awaited.
In 2020 alone, the Land Registry paid out £3.5 Million in compensation for fraudulent transactions that they had registered. However, it is worth noting that this figure pales in comparison to the amount of legitimate transactions the Registry deals with each year.
The second type of fraud common to property transactions is ‘Payment Diversion Fraud’. This is where, as the name suggests, monies paid either in or out on transactions are intercepted by fraudsters.
Recently, the purchaser of a property had £640,000 stolen when fraudsters intercepted emails between them and their solicitor. The criminals had copied the format and layout of the original emails and ‘swapped out’ the bank details being sent by the firm for their own account. Suspecting nothing was wrong, the client sent the balance to the criminal’s account and ended up having to withdraw from the transaction when they were unable to recover the majority of the funds.
The risk of fraud is particularly high in properties falling into these groups:
- Buy to let and rental properties
- Empty properties
- Properties that are not registered at the Land Registry
- Properties where the owner lives overseas
There are a number of ways that you can reduce your property against the risk of fraud, some of which we have listed below:
- You can apply to receive an alert from the Land Registry if someone applies to change the register on your property. Although this will not automatically prevent the application from being made, it will notify you and give you a chance to take steps to prevent it.
- You can apply to the Land Registry to have a restriction placed upon your title that requires a solicitor or conveyancer certifies that the person disposing of the property is you. Whilst firms are under an obligation to verify their client’s ID, this offers an additional level of protection as well as covering against fraudsters who attempt to sell the property without legal representation. These restrictions can require the certification of identity of either individuals or companies, and so can be used both by individuals and businesses.
- If your property is not yet registered at the Land Registry, the best step you can take is to have it registered. Registering the property also means that if you are the victim of property fraud, you could be compensated by the land registry for any financial loss.
- When conducting any property transaction, ensure you read and re-read any information your conveyancer has sent you regarding their payment procedures before sending any funds. To be safe, we advise sending a small initial sum (£1) and confirm with your conveyancer via telephone (using the telephone number you were provided with when you first instructed them) that it has been received.
If you require any advice in relation to residential or property fraud, please contact our Property Department on:
Exeter 01392 285000 Cullompton 01884 33818