Landlords have been identified as one of several groups at high risk of an increasingly common form of property fraud. Growing numbers of landlords are finding that their tenants have posed as the rightful owner of the property and either fraudulently secured a mortgage against their property or even sold it from underneath them.
As the body responsible for compensating defrauded landlords in such cases, in 2010 the Land Registry compensated 71 property owners who had fallen victim to this form of property fraud. The Land Registry has also reported it was successful in preventing a further 100 fraudulent transactions, involving property worth in the region of £47m, taking place during the same period. Worryingly, occurrences of this type of fraud are on the increase.
In an effort to encourage landlords to protect themselves against fraudulent claims and applications, the Land Registry has announced it will allow landlords and absent property owners to register a free restriction on their property deeds. This restriction will require a solicitor to certify that any person attempting to sell or re-mortgage the property is indeed the legal owner. For regular property owners a small fee will apply.
In light of this rise in property fraud landlords are encouraged to ensure all of the properties within their property portfolio are registered with the Land Registry in the first instance. This not only offers protection in its own right, it also allows property owners to add, and benefit from, the restriction discussed above.
To further protect themselves, landlords who have previously lived in the property they are renting, or intending to rent, are advised to use the Post Office’s mail redirection service for around one year after moving out of the property. This will prevent personal and potentially confidential information from falling into the wrong hands. Landlords are also advised to implement a tenant screening process which utilises credit checks and references. Many managing agents will offer these services for a small fee.
Holmes & Hills offers a wide range of legal advice for landlords covering Landlord & Tenant Law, as well as a wide range of residential property matters including offering advice on residential property disputes and providing conveyancing services.
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