July is the Citizens Advice Bureau’s scam awareness month. Landlords, property owners and investors, particularly overseas investors, are not immune to sophisticated property fraud and scams. With property commanding ever higher prices, it is important to be aware of potential scams and fraud and, where possible, counter the risks. Associate Nikki Yates explains how.
Property scams typically happen at the time of purchase or sale, but the owner should also take precautions once the property is purchased, particularly when letting to tenants or if the property is empty. Outlined below are the three steps and possible risks in a property transaction.
Step 1: The Investment
Beware of property investments that seem to be too good to be true. Never part with any funds until you have thoroughly researched the company and investment opportunity. Be wary if you are being rushed into anything or things just do not add up - trust your instincts.
Step 2: The Transaction
Once you are happy to proceed, the transaction is an ideal time for fraudsters to try and divert exchange or completion monies. There have been several incidences where one of the parties reportedly requests that funds are paid into a different account when in fact it is a fraudster hacking someone's email account and giving their bank details instead. Bank details should not be sent by email if this can be avoided. Details should, where possible, be given by telephone or in person. If in doubt, call the other party to check the details. Bear in mind solicitors and companies rarely change their bank details.
Step 3: Protecting your assets
Once you have successfully purchased the property, you need to ensure you protect your investment. If you are renting the property out, you should ensure you instruct a reputable agent to find tenants, and ensure all the required checks and references are obtained and the necessary documentation is in place and sent to the tenant. It is particularly important that any deposit is protected.
There have been alarming reports recently of fraudsters transferring property that does not belong to them, leaving the real owner without their high value asset and the very difficult job if having to try and trace the funds. Any property can be targeted, but those at higher risk include properties which have no mortgage, are empty or rented out or those which are not registered at the Land Registry.
Top Tips to counter scams
To try and counter the risks of any such scams or fraud, property owners should:
- Ensure that regular inspections of the property are carried out to ensure it is being well looked after and occupied by the tenant.
- Ensure that the Land Registry title of the property is up to date with any irrelevant entries removed. It is particularly important to ensure contact details are up to date. It is of paramount importance where the property is empty or rented out that the contact address is not the property address. Fraudsters are more likely to target properties that they think are not being monitored or have out of date information on the title.
- Set up a Land Registry Alert (https://propertyalert.landregistry.gov.uk/). This is a free service where you can sign up to receive alerts from the Land Registry by email when there are certain activities on the property selected. This is particularly helpful for landlords as ten properties can be monitored at any one time free of charge. It is highly advisable to set up such an alert when the property is empty, even if only for a short period, or in respect of holiday lets or rented properties. It is also worth setting up an alert for your own property as well. The alert will notify you by email of any activity on the title of the property and you will then have the opportunity to contact the Land Registry about it if it is not a bona fide activity by the registered owner.
- Place a restriction on the title (Land Registry Form RQ). This is particularly useful for landlords as a conveyancer or solicitor must certify that any application is made by the registered owner before the Land Registry can register a sale or mortgage. This is an added layer of protection against fraudulent activity. This is a straightforward form to fill in and there is no fee where the registered proprietor does not occupy the property (or a £40 fee if you do live at the property).
- Register unregistered property at the Land Registry. Any unregistered property should be voluntarily registered at the Land Registry so that the registered owner’s details are documented so as to make any fraudulent activity more difficult.
If you do suspect any fraudulent activity or an attempted scam, contact the Land Registry's dedicated property fraud line - 0300 006 7030 - or email them at firstname.lastname@example.org, and also report it to Action Fraud - 0300 123 2040.