Protecting yourself and your business from property fraud

Devising the best barriers to fraudulent activity is often the only measure standing between your firm and a potentially damaging encounter. Bridging Advisor’s Ian Walker spoke to Karen Wilbourn, Assistant Land Registrar at the Land Registry, to find out more about a recent seminar entitled “Protecting Yourself from Property Fraud”…

Last year the Government paid out over £5 million worth of indemnity compensation to consumers affected by property fraud, a £2 million decrease on the previous year.

Despite there being a 12 per cent decrease in the number of property fraud claims in the previous 12 months, Karen heeded a warning to lenders and consumers to ensure they are safeguarded from fraudsters.

“Property fraud is a big problem for the lenders; lenders are increasingly getting caught out with misrepresentation of income or property value,” claimed the Assistant Land Registrar, who also sits on the Mortgage Fraud Forum.

Legislation within the property market attempts to negate a balance between the interests of all that have been affected by the fraud. Quite often, the mortgage lender is caught up within the conflict, despite having in-house checks, which usually results in some form of financial indemnity. The claimant however, is subjected to a settlement argument in which the court must attempt to decipher whether or not the property is kept.

“There is a large responsibility on the lender to ensure they are dealing with who they say they are, particularly when carrying out the counter-fraud obligations bestowed upon them.

“We are regularly in touch with lenders’ in-house fraud teams; overall however, whilst concerns are the same, we both have different pinch points,” she added.

The seminar also directed a lot of its warnings towards the consumer and property investor, outlining a particular decorum in which to safeguard properties, though also stressed that protecting a property from fraud completely is near impossible.

Empty properties are proving to be a favourite for fraudsters by erecting pseudo-development advertisements outside the property in order to entice potential victims. The fraudster then uses an auction to sell the property, quite often using an introducer as a go-between for the two parties.

However, with an increasingly vigilant industry watchdog, the regulator reported that of the 5 million property transactions performed in the UK every year, only around 100 of them will be fraudulent.

In spite of that, the Register, which covers 80 per cent of inland mass property, warned of the importance of keeping the register up-to-date; in particular, Karen reiterated the significance of maintaining contact details on the register. When the Registry picks up on what they believe to be suspicious activity, they attempt to make contact with the owner in order to make them aware of the transaction.

There is also the option to ‘freeze’ the asset on the register by filling out a restriction form. This limits the owner in disposing of the property by enforcing the owner to produce a certificate from a conveyancer in order to prove identity.

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