Property fraud is an increasing concern across the UK, affecting homeowners, landlords, investors and businesses alike. Fraudsters are becoming more sophisticated in the way they target residential and commercial property, particularly where a property is mortgage-free, empty, rented out, or owned by someone living elsewhere.
While cases of outright title fraud remain relatively rare, property transactions involve large sums of money, sensitive personal information and strict legal processes, making them an attractive target for criminals.
Our property lawyers always undertake extensive checks and due diligence designed to identify suspicious activity and reduce the risk of fraud during a transaction. This article explains how property fraud can happen, who may be most at risk, warning signs to look out for, and practical steps that may help protect your property.
What is property fraud?
Property fraud is a broad term used to describe criminal activity involving fraudulent activity relating to property ownership, property transactions, identity theft, or the movement of funds connected to property.
Examples may include:
- someone impersonating a property owner in an attempt to sell or mortgage a property they do not own
- identity theft used to support fraudulent transactions
- interception or diversion of mortgage or purchase funds
- fraudulent tenancy or rental arrangements
- misuse of company information linked to commercial property ownership
- scams involving vacant land or empty properties
One of the most common forms is title fraud. This is where a fraudster attempts to pose as the legitimate owner of a property in order to sell it or raise finance against it.
The increased accessibility of HM Land Registry records has made it easier for individuals to obtain information about properties. While the Land Registry system itself remains secure, publicly available ownership information can sometimes be used by fraudsters attempting to impersonate owners or create convincing false identities.
How does title fraud happen?
Fraudsters often target properties which appear easier to exploit, particularly mortgage-free properties, empty homes, buy-to-let properties, properties owned by people living overseas, commercial premises with limited occupation and vacant development land.
A common scam in the UK is fraudsters attempting to sell a property quickly while posing as the owner. Vacant properties can be particularly vulnerable because there may be less day-to-day oversight and post or notices may go unnoticed for longer periods.
Fraudsters may attempt to create urgency around a transaction, pushing for a quick sale before concerns are identified. However, it is important not to assume that every fast-moving transaction is suspicious. Many legitimate buyers and sellers also want transactions completed quickly and this means that in the process of conveyancing there must be a constant vigilance to establish who is genuine and who is not.
How solicitors help identify potential fraud
Suspicious behaviour is usually identified through a combination of factors, rather than one isolated issue alone. Modern conveyancing involves significant identity verification and due diligence procedures that check whether:
- the seller can genuinely be linked to the property
- identity documents appear legitimate
- source of funds information is consistent
- there are unusual features within the transaction
- powers of attorney remain valid and have not been revoked
For example, a solicitor may ask for documentation connecting an individual to the property address itself, rather than relying solely on photographic identification from another address. This could include council tax correspondence, utility bills, service charge documentation or probate documentation where relevant.
It is also extremely important to verify bank details carefully and, in all cases, avoid reliance on emailed payment information. Interception of bank account details remains a significant risk within property transactions and clients are often advised to verify bank details independently by telephone before transferring funds.
At Scott Bailey, we use market-leading verification and due diligence tools to support our process.
Who may be most at risk of property fraud?
Certain properties and ownership structures may carry increased risk, including:
- Mortgage-free properties: properties without a mortgage can sometimes be viewed as easier targets because there is no lender carrying out additional checks or monitoring the title.
- Empty or vacant properties: homes left empty for extended periods may attract unwanted attention, particularly where post accumulates or there are visible signs the property is unoccupied.
- Overseas owners: owners living abroad may be less likely to spot unusual correspondence or suspicious activity quickly.
- Buy-to-let landlords: while landlords are not necessarily more vulnerable to property fraud than other owners, issues such as illegal subletting, fraudulent tenants and vacant rental properties can create additional risks in some circumstances.
There have also been reported cases in the UK where homeowners returning from extended periods away discovered that fraudulent sales or occupation issues had arisen while the property was empty. In one widely reported case covered by the BBC, a man returned from holiday to his home in Luton to discover strangers living in his home after it had allegedly been sold fraudulently. Situations like this remain relatively rare, but they demonstrate why vacant properties can be more vulnerable to fraud and why early detection is important.
Commercial property Fraud
Commercial property can also be targeted. We asked one of our commercial property solicitors, Roger Clayson, what that might include:
- vacant commercial premises
- mixed-use buildings
- investment portfolios
- development land
- properties held through companies
- Ransom strips
How can you help protect your property from fraud?
The good news is, there are several practical steps you can take to protect your property from fraud, including:
- ensuring your address for service at HM Land Registry is correct and up to date
- setting up HM Land Registry Property Alerts
- considering anti-fraud restrictions where appropriate
- protecting identity documentation and personal information
- being cautious with unexpected emails or payment requests
- verifying bank details independently
- monitoring unusual correspondence relating to mortgages or ownership
- seeking legal advice quickly if something appears suspicious
We cannot stress enough that vigilance and common sense remain important. Fraud prevention is often about recognising unusual patterns, inconsistencies or pressure tactics early.
What is a property fraud restriction?
A Form LL restriction registered at HM Land Registry is designed to help prevent the type of fraud in which a fraudster can obtain details of a registered property owner. It helps create a sheild which can act as an anti-fraud measure designed to make it harder for someone to sell or mortgage a property fraudulently because it introduces a restriction against your title that reads:
“No disposition of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by a conveyancer that the conveyancer is satisfied that the person who executed the document submitted for registration as disponor is the same person as the proprietor.”
To sell or mortgage the property, the fraudster has to obtain a certificate from a conveyancer to comply with the Form LL restriction in the register. It might be difficult to convince the conveyancer that they are the true owner, so the fraudster could be deterred from targeting the property.
Warning signs of potential property fraud
Potential warning signs may include:
- unexpected correspondence relating to mortgages or ownership
- missing post or bills
- sudden pressure to complete unusually quickly
- requests to transfer funds to unfamiliar bank accounts
- unusual Land Registry notifications
- inconsistencies in identification documents
- unexplained occupation or subletting arrangements
- tenants being pressured to pay deposits unusually quickly
However, these signs do not automatically indicate fraud, so don’t panic. Many transactions involve urgency or changing circumstances for entirely legitimate reasons. The best thing you can do is work with an experienced conveyancer who carries out essential due diligence, knows what signs to look out for, and how to deal with problems should they arise.
Property fraud involving companies and commercial property
Property fraud is not limited to residential homes. Commercial premises, investment properties, mixed-use buildings and development land can also be targeted, particularly where ownership structures are more complex or properties are vacant.
In some cases, fraudsters may attempt to impersonate company directors or individuals connected to a corporate property owner. Because certain company information is publicly available through Companies House, criminals may try to use that information to support false identities or create the appearance of legitimacy.
Vacant commercial units and development land can also present increased risk. Unlike residential property, commercial premises may not always have regular day-to-day occupation, making unusual activity less likely to be spotted quickly.
Commercial property transactions can involve additional layers of due diligence, including:
- verifying company ownership information
- checking the authority of individuals acting on behalf of a company
- reviewing occupational arrangements carefully
- confirming VAT positions where relevant
- investigating title issues and access rights
- verifying powers of attorney where they are being relied upon
Illegal subletting and inaccurate information regarding occupation arrangements can also create serious complications during commercial transactions. Careful investigation at an early stage is therefore essential.
Development land may require particularly detailed investigation. Issues involving access rights, ownership boundaries and ransom strips can significantly affect the value or usability of land if they are not identified early in the transaction process.
Ultimately, both residential and commercial property transactions rely on careful legal due diligence. Identifying inconsistencies, verifying ownership and carrying out thorough checks can help reduce the risk of fraud and protect all parties involved in the transaction.
VAT risks in commercial property transactions
Commercial property transactions can involve additional financial and legal complexities which require careful investigation during the due diligence process.
One important example is VAT. The supply of some commercial properties is subject to VAT because the owner has formally “opted to tax” the property. If this is not identified correctly during the transaction, buyers may later discover that significant additional costs apply.
These can potentially include VAT on the purchase price, increased Stamp Duty Land Tax (as SDLT will be calculated on the VAT as well), and higher Land Registry fees due to the increased transaction value.
In some cases, buyers may only become aware of these issues after completion has taken place. While this will not necessarily amount to fraud, inaccurate or misleading information provided during a transaction can create serious financial consequences.
Commercial property transactions often involve multiple layers of investigation, including reviewing tax status, title documentation, occupational arrangements and company ownership structures. Carrying out thorough legal due diligence at an early stage can help identify potential issues before contracts are exchanged.
While property fraud remains relatively uncommon, it can have serious consequences for homeowners, landlords, businesses and buyers alike. As fraudsters become increasingly sophisticated, taking simple preventative steps and remaining alert to unusual activity is more important than ever.
Keeping your HM Land Registry address for service up to date is one of the most important practical steps property owners can take. Land Registry alerts and anti-fraud restrictions may also provide additional protection, particularly for mortgage-free, vacant or investment properties.
Ultimately, there is no single measure that completely prevents property fraud. However, careful due diligence, common sense and early legal advice can all play an important role in reducing risk and helping to protect your property.
What should you do if you suspect property fraud?
Speak to your solicitor quickly. We can assist clients in understanding the situation, liaising with HM Land Registry where appropriate, and advising on next steps. In addition and where needed, we can work closely with our litigation and dispute resolution team. However, criminal investigations themselves will ultimately involve other specialist authorities.
How our property lawyers can help
Our residential and commercial property lawyers regularly conduct detailed due diligence designed to identify potential risks within property transactions.
If you are concerned about potential property fraud, or would like advice regarding preventative measures, our team would be happy to discuss your circumstances.
