Property title theft is costing the Land Registry a fortune in compensation. Make sure you don't fall foul of it.
The Land Registry has confirmed that since 2006 it has handed over a whopping £26m in compensation to land owners who have fallen foul of property title fraud. Indeed, just last year it handed over compensation of more than £4.5m.
So what is this costly fraud, and how do we protect ourselves against it?
Property title fraud works like this. The fraudsters will use forged documents to present themselves as the owners of the property. They can then take out further loans against the property, pocketing the cash themselves while leaving the actual homeowners saddled with further debt.
It sounds ridiculously simple, and that’s because it is. All the fraudsters need to do is lodge this dodgy paperwork with the Land Registry. In most cases, it is only apparent that the fraud has taken place when the legitimate owners try to sell the property, which may be several years – and several ‘additional’ mortgages – later.
Who is most at risk?
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By moving all of the home ownership data online, it only takes a few clicks of a mouse for someone to find out who owns your home, when you bought it and how much for. As a result, all of us are at risk in some way from title fraud.
However, some properties are far more likely targets than others. For example, life is a lot easier for the fraudster if the property doesn’t have an existing mortgage – getting a second mortgage on a property will lead to far more questions from the lender than if the property is already owned outright.
Unoccupied or tenanted properties are also particularly at risk, as it tends to be easier to intercept the mail at these types of properties. Indeed, the Association of Residential Letting Agents has been very vocal in urging all landlords to contact the Land Registry to ensure that all notices and official communication is sent to an alternate address.
According to the Law Society, other properties at particular threat of title fraud are those undergoing redevelopment and high-value properties with an outstanding mortgage, but with the owner living overseas.
A low watermark
One of the factors that has potentially contributed to the growing issue of property title theft is the change in the way that properties are registered with the Land Registry. Up until 2003, the Land Registry issued watermarked certificates as proof of ownership.
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However, once an online system was introduced, they were scrapped. Since then the Freedom of Information Act has led to potentially embarrassing internal emails becoming public knowledge, admitting that this action may have helped the fraudsters, though the official line from the Registry is that most acts of fraud are committed before the Registry is even involved.
Address for service
If you believe your property is potentially vulnerable, then the first thing you need to do is ensure that the ‘address for service’ that the Land Registry has for you is up to date.
The address for service is the address that the Land Registry will send all notices and letters to. Everyone who owns, or has a legal right to or interest in a property needs to have at least one address for service recorded with the Land Registry, though you can have as many as three. For more on how important this is, and how to update your address for service, check out this official guide from the Land Registry (opens as a PDF).
The insurance debate
Another protection method is to take out a form of title theft protection or insurance. These come in different shapes and sizes – GateKeeper for example adds a number of additional stages before somebody can access the title, including security codes while the firm claims no changes can be made to your title without your expressed consent.
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However, specific insurance to cover financial losses incurred as a result of this fraud have been slammed by the Law Society, which reckons the policies are not only ineffectual in guarding against the fraud, they are pointless as well. This is because the Society already has an established compensation fund to cover losses, negating the need to shell out around £150 a year on title theft insurance.
Register a restriction
Instead, you can register a restriction with the Land Registry. This will set you back a one-off payment of £50, and means that the property cannot be mortgaged without the specific consent of either you or your conveyancer.
Your solicitor will be the best person to speak to if you are considering adding a restriction onto your title in this way.
If you’re a victim
If you believe that you have already been caught out by fraudsters, or that the register has been changed so that you are no longer listed as the owner, then you must contact Land Registry immediately. You should also contact the police.
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