Property can be sold and mortgaged to raise money and can, therefore, be an attractive target for fraudsters. Often, fraudsters steal the real owner’s identity and then sell or mortgage the property by pretending to be them. If it is not discovered promptly, the true property owner might find their property has been transferred or sold without their knowledge. Fixing the mess, and getting any mortgage taken off the register, can be distressing, timeconsuming and costly. That is why HM Land Registry (HMLR) encourages all property owners to do what they can to reduce their risk of fraud.
Earlier this year, Laylah De Cruz and her mother Diane Moorcroft were found guilty of conspiracy to commit fraud. They duped professionals into enabling a fraudulent application for a £1.2m bridging loan on a house in Kensington, London. Diane Moorcroft impersonated the registered proprietor by changing her name. When the application to change the register was made to HMLR, it was identified as fraudulent, the application was cancelled and the registered owner did not lose their property. Unfortunately, the loan company had already advanced the money. In March 2017, the daughter and mother were sentenced to five and three years in prison respectively.
The property in question was attractive to fraudsters because it:
Since 2009, HMLR has stopped fraud on properties worth more than £92m. However, no system can be 100% fraud proof, which is why we work with other organisations to focus on prevention, detection, protection and education. The majority of property frauds are carried out before registration, so we work closely with stakeholders, including the Law Society, the National Crime Agency and the Financial Conduct Authority to reduce the opportunities for fraud, and take corrective action when it has happened.
We have a dedicated counter-fraud team, and in recent years have introduced new controls to help us detect fraud. This has helped to increase our knowledge about the way fraudsters target particular property groups. We have, therefore, been able to identify those properties where there can be an increased risk of fraud.
We know that fraudsters target empty or rented properties:
Mortgage-free properties are also at higher risk of being targeted by fraudsters as they do not have the barrier of needing the lender’s permission before the property can be sold. Currently, there are over 12 million mortgage-free properties in England and Wales.
…HMLR encourages all property owners to do what they can to reduce their risk of fraud
HMLR does not have the necessary powers to investigate or prosecute fraudsters. We assist the police and other bodies in identifying methods of property fraud, but prosecutions are a matter for law enforcement agencies.
We have statutory rights to recover money paid out in indemnity if, for example, a solicitor who acted for the lender or the fraudster was negligent. Since 2010, we have recovered nearly £5m, but it is rare that we recover any of the money actually obtained by the fraudster.
Since November 2016, we have added signposting to our fraud advice to all our registration completion letters.1 We provide citizen-friendly property fraud advice in a variety of ways, but we largely rely on our stakeholders, including CILEx members, to pass on our fraud advice to their clients.
Last year, CILEx undertook some research with its forum of conveyancers, which showed that they thought that HMLR should publicise its Property Alert service more widely. We have been raising awareness of the service to our customers and citizens, but are limited by marketing budget restrictions. This is why we need to work closely with our partners to spread our advice even further.
If you are able to, please:
Some conveyancers have expressed interest in signing up for Property Alert on their clients’ behalf. While this is possible, there is the risk that the alert e-mail which we send out is not forwarded immediately to the property owner. As speed is of the essence in spotting whether the transaction is suspicious and, if so, contacting HMLR, we would recommend that your clients sign up for the service themselves.
More property fraud advice is available at: www.gov.uk/propertyfraud
When it comes to property fraud, obviously prevention is better than cure. While incidents of registration fraud are rare, they cause great distress to the victims as well as damage to HMLR so we take the issue extremely seriously. We would like to work as closely as possible with you to ensure that this type of fraud happens as rarely as possible.