Take steps to avoid property fraud

It’s every landlord’s worst nightmare. One day they own a beautiful property in central London and then they learn they no longer own it. It’s not that they’ve sold it, but that an unscrupulous con artist has fraudulently transferred the title to their own name or taken a mortgage out against the property. “If you own property investments in London, you really need to make yourself aware of the role of the Land Registry and take steps to prevent title fraud, which is becoming more prevalent,” comments Marc von Grundherr of Benham and Reeves Estate Agents.

If you think that title fraud can easily be rectified with a few phone calls to the Land Registry, think again. In a recent landmark case, Swift 1st Ltd v. The Chief Land Registrar, the legal owner had been impersonated which meant that the register was altered to allow a mortgage to be entered after it had been forged. The case is a poignant reminder as to why homeowners need to be vigilant when it comes to protecting their title.”

This increasingly common crime exploits many of the loopholes in the Land Registry system, the central government registry of property titles. Although most land and property is registered with the body, there are still pockets of land across the country which have never been registered. In fact, as much as 20% of the land in the UK may not yet be registered. Owners are not obliged to register a property unless it is being sold or transferred and even this rule did not come into practice until 1990, 133 years after the Land Registry was founded. To check if your property is registered, simply complete our online valuation tool here which will give you a free rental appraisal of your property. Only properties registered with The Land Registry can be appraised so if the tool does not work for your property, you may want to contact The Land Registry to make further enquiries.

Predominantly, fraudsters target non-residents and properties owned by off-shore companies as these are seen as ‘soft targets’. Legal owners are often unaware how to protect themselves and given delays in communication, the sale or transfer of the property may have already happened by the time the legal title holder realises the fraud.

Fraudsters also exploit land and homeowners’ inattention. The Land Registry allows title holders to keep up to three addresses, including email addresses and overseas addresses, on file with the agency. If there is a change to the title or it is transferred, notice is given to the address holder. However, if the title holder has neglected to provide details or keep those up to date, fraudsters can exploit this and intercept the notices.

In recent years, the Land Registry has made it easier for homeowners to prevent property fraud. Unregistered properties can be registered with the agency, even if they are not being sold or transferred, for a reduced fee. The most effective way of preventing fraud, however, is to keep the Land Registry up to date. Provide the agency with three addresses, including at least one email address and keep these addresses up to date.

The agency also allows title holders to sign up for alerts so that they can be notified if someone tries to make changes to the title. Mortgaged properties typically have a charge over them preventing disposal without notifying the lender. Title holders of unmortgaged properties can also apply for a restriction to be placed on the title so that it can not be disposed without a certificate from their solicitor. This is highly recommended for any non-mortgaged properties without a charge over them.

Thereafter, property owners should employ the usual sensible advice: ensure the property is occupied by reputable tenants, that it is managed by an ARLA-registered letting agent and that personal and identifying documents are locked away or disposed of securely.

Our five tips on how to protect yourself are:

• Ensure your property is registered with the Land Registry and ensure they have three up to date addresses, including an email address
• Register for alerts when there are changes to the property’s title
• Apply for a restriction to be placed on the title to prevent a disposal without a certificate from a solicitor if the property is unmortgaged
• Let the property through an ARLA member letting or leasing agent and have them manage it, so the property is regularly checked
• Keep personal and identifying documents locked up and dispose of them securely

If you suspect someone is trying to fraudulently claim the title on your property, contact the police immediately and take the necessary steps to ensure the property is not let or sold until the conflict is resolved. For more information about letting your property in London contact one of our friendly negotiators.