Property Fraud – Be on Alert

Be aware of fraud and identity theft when you look to buy, rent, sell or let out your property.

According to money.co.uk around £4 billion was lost to fraudsters in the UK in 2022. It is hard getting a definitive figure on property fraud, but the Land Registry paid out £3.5m in compensation in 2020 for property-related fraud. This is when they are liable for an administrative error that could have helped enable the fraud, but in many cases, it is the solicitors who need to compensate victims through their professional indemnity mechanisms after representing clients who are not the  ‘genuine’ client.

In 2018, in the case of Dreamvar v Mishcon de Reya,  the Court of Appeal ruled that solicitors for both buyers and sellers have a responsibility to spot and prevent fraud and not hand the proceeds of a sale over to criminals.

As estate agents, we have legal obligations to ensure that we thoroughly check the identity of every vendor who places their property on the market with us and every buyer who looks to buy a property through us.

It is not just our transactions that we need to worry about though

We are concerned to read of recent reports in the wider property industry that individuals who register looking to buy or rent property are increasingly being targeted with emails pertaining to be from the genuine estate agencies they are registering with.

As with a lot of modern-day commerce you need to be on your guard when it comes to your interactions with third parties and given the sums of money involved in property, you should take extra care and attention.

A genuine estate agency:

· Never asks for payment to view a property

· Sets out exactly what fees are due for lettings and when they are due

· Is registered with a redress scheme such as the Property Ombudsman

· Has a history of trading you can see online through client testimonials

· A local presence whether that is boards or advertising up or a physical office presence

· Is registered with the Information Commissioner’s Office for the handling of personal data

· Is registered with HMRC for the purposes of anti-money laundering and prevention of terrorist financing – a requirement by law for all sales agents, and any lettings agent with a single let above £10,000 per month

Further points to consider

We look for clients who are selling to appoint a solicitor early on in their marketing phase. From a similar vantage point if you are looking to purchase a property there is no reason why you wouldn’t provisionally instruct a solicitor before you have found a property.

The reason for this is that we like clients to get familiar with their solicitor and ensure they know all the relevant bank details. Once bank details have been given to a client – we have never known a solicitor to change them during the course of a transaction.

Think about your use of social media and giving out personal details

If you are transacting on a sale or purchase, please think twice about publicising the details on social media before your transaction is complete. If fraudsters know your bank account will be seeing some high-value transactional activity you could be targeted in a sophisticated manner and there is no point in opening yourself up to this sort of exposure.

Sometimes you see the local Facebook groups contain a post from a local resident saying ‘I’ve just listed my house with agent X – here’s the link’ now while it might seem like a great thing – Rightmove and the rest of the portals are there for a reason, and one of them is to create a barrier between public knowledge of you, your sale intentions and the transaction itself.

For the same reason, if you are using an agent that requires you to take a prominent position in the viewings and negotiations with buyers, you should really put your own safeguards in place in terms of how much information a potential fraudster could glean from knowing the house is on the market and having your direct contact details. Certainly, if after a particular viewing, you start to receive marketing material from ‘solicitors’ ‘financial advisors’ and other companies offering various ‘buying proposals’ you should immediately seek a trusted opinion or do further research.

Set up a property alert for your property

If you are concerned by this article and want to put in place some safeguards you can register up to 10 properties for free with the Land Registry and be alerted if someone tries to change the register for your property. Please see the following link.

https://propertyalert.landregistry.gov.uk/

This will not automatically block any changes to the register but will notify you of any changes so you can take immediate action.

If you have any feedback on this article or would like to discuss any aspect of it please get in touch. Please note no member of our team can give legal advice and if you think you have been a victim of fraud, or are in a situation just now where you feel you might be becoming a victim you should contact the police immediately.