The top 5 rotten property scams!

by John Fitzsimons on 05 August 2010  |  12 comments
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Be on your guard against these awful property tricks.

There are few things more important to us than our homes, whether we rent them or buy them. However, there are always scammers ready to take advantage of us and use property to separate us from our hard-earned cash.

Be sure to watch out for these five shocking property scams.

The National Landlords Association imposters

This month has seen a new rental property scam come to light. Phony landlords have been advertising imaginary rental properties on free listings site Gumtree.

Innocent potential tenants (often based overseas) then get in contact, and following a series of normal seeming emails, will be asked to send money on to the landlord, often as a deposit. Once the money has been sent, when the tenant tries to contact the landlord or collect the keys, the scammer has disappeared, leaving the victim out of pocket.

What makes this scam extra sneaky is that the scammers have been using the National Landlords Association (NLA) logo, and even mocked up NLA stationery to give the appearance of legitimacy to their enterprise.

If you want to confirm that your landlord is indeed a member of the NLA, then head over to the trade body’s Good Landlord website.

It should also go without saying that having to pay up front for a rental property you haven’t even seen in person should set off the alarm bells.

Phantom rental properties

Sadly, such rental scams are not exactly new. Earlier this year warnings were made about a phantom rental property scam that had been growing in size.

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In this instance, the landlord is the one who is supposedly overseas. You’ll be asked to prove that you have the required funds for the rental property by performing a money transfer. However, this transfer won’t be to the landlord – it will be to someone that you trust, perhaps your partner or a relative.

You’ll then be asked to send a copy of the money transfer receipt to the landlord. However, when you or your partner go to collect the money, it will be long gone. Money transfers are not a particularly secure – according to Citizens Advice, which brought the scam to the public’s attention, sharing your receipt or money transfer number with a stranger is like handing over your PIN.

Property investment courses

A couple of years ago it seemed that property was a rock-solid investment. Not only were the TV listings filled with property programmes, but there were hundreds of different property seminars offering you tips on how to get rich quick off the back of bricks and mortar.

Sadly many of these were just scams. You’d hand over money just to go to the seminar, and then be offered the chance to purchase some property that hadn’t even been built yet at a big discount.

However, the land is typically agricultural or derelict, and not suitable for development – the scammers certainly know that, but it won’t be mentioned in any of the glossy brochures or Powerpoint presentations at the course.

Surprise, surprise, you’d end up with no property and out of pocket by thousands of pounds. Remember, if it sounds too good to be true, it probably is.

Land Registry property fraud

This one is truly terrifying – scammers managing to transfer the ownership of your home to a completely different person!

The scammers find a target property, often using the Land Registry’s own data to find properties that are owned outright, but also those where the owner lives elsewhere. The scammers will then contact the Land Registry asking to change the ownership details of the property. The Land Registry will then send letters to the property to confirm this change. However, the scammers may attempt to intercept that correspondence.

Should the fraudsters succeed in changing the ownership details of the property, they may then take out a new mortgage on it, or even try to sell it, disappearing with the proceeds.

The one way to protect yourself from this scam is to keep your contact details with the Land Registry up to date, which you can do on the Land Registry website.

Sale and rent back

For a long, long time the vast majority of people operating in sale and rent back were little more than scam artists, preying on the desperation of struggling homeowners, though thankfully new regulation should start to clean the sector up.

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As the name suggests, sale and rent back schemes would see you sell your property to a firm, but continue to live there as a tenant. It was very much a last resort for those homeowners facing escalating debts and falling behind with their mortgage. This way they could avoid the upheaval of having to actually move their families, but still use their biggest asset - their home - as a solution to their money worries.

In reality, the homeowner would be severely ripped off, selling their home at a price far below the market value. What’s more, the small print of the agreement would only provide the tenant with guaranteed tenancy for six to 12 months, so within a year you’d end up out on the street.

It was an utterly appalling scam, but now the FSA has ramped up its regulation of sale and rent back, those who are desperate enough to proceed with such a deal will at least enjoy a bit more protection.

Any more property scams?

If you know of any more property scams we've missed or if you yourself have been a victim of a property scam, please share your experiences with other lovemoney.com readers using the comments box below.

More: Don’t miss this ultra low 2.19% mortgage rate! | It's cheaper to buy than to rent!

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This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

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