Seven property scams, and how to avoid them

Fraud is on the rise in all areas of our lives, and unfortunately property is no exception. Last year saw a 29 per cent increase in conveyancing scams, with homebuyers particularly vulnerable.

‘We like to feel secure in our homes,’ reflects Edward Sharpe, our head of residential property. ‘Our home is also often our biggest financial asset, which unfortunately can also attract professional scammers. Buying a home, or renting one, you will have many things to focus on. Keeping your money safe should be high on the list of priorities.’

Here Edward Sharpe looks at seven of the most common property scams and gives some advice on how you can avoid becoming a victim.

Fake conveyancers

This scam targets homebuyers, especially first-time buyers. A fraudster sets up a fake office or a fake branch office of a genuine law firm. Their website, emails and letterheads can look deceptively genuine. In some cases, they may even have cloned the original website. They then trick their ‘clients’ into sending money to a bogus account, which they empty before disappearing.

When choosing a conveyancer, it is important to know who you are dealing with. You can check a firm’s identity and addresses on the Solicitors Regulation Authority’s website, at SRA | Solicitors Register | Solicitors Regulation Authority. However, you should not rely on this alone as some fraudsters may impersonate genuine solicitors. Look out for any potential red flags, such as:

• the lack of a physical office; or
• a website that uses http instead of https.

If you do not know the conveyancer personally, ask your estate agent or somebody you trust with local or professional knowledge about them. Meet your solicitor in person or speak to them by telephone or online. You should be confident they are who they say they are.

Utilities scams

Fraudsters also pretend to be from utility companies. Someone may contact you in person, calling at your door, by phone, or via email or social media. They may claim you are behind on payments or say they can offer you a better deal; if you are moving home, you may well be receptive to switching suppliers. However, the person contacting you does not work for the utility company. Instead, they will pocket your money themselves or simply harvest your data to sell on.

You should treat any unsolicited offers with caution and do not share your personal details. Always ask for identification and verify this independently with the utility company, for example, by phoning the number on a bill or from their website.

Conveyancing deposit scams

This is a particularly cruel scam and typically happens just before exchange of contracts. With your attention focused on your impending move, you may not think twice about an email which appears to come from your solicitor asking you to transfer the deposit for your purchase. However, there is a small but significant risk the email is not from whom it says it is. A fraudster may have hacked your email account (or your solicitor’s).

Perhaps the fraudster says the account details have changed or gives you a bogus link. By following their instructions, you may send your purchase monies to them instead.

You can reduce the chances of this happening by choosing a conveyancing firm with robust anti-fraud measures in place. For example, when you first instruct us we will always set out in writing the method for transferring funds. We will ask you to check any proposed change to this using the phone number we have given you at the outset.  We use a secure client portal to provide bank details.  We can also send details via a secure email link.  If you are in any doubt about any instruction you receive from us, speak to your solicitor first.

Fake buyers

Sometimes a fraudster will pretend to be a potential buyer and make an offer for your property. The deal will fall through, but not before they have harvested details of the property and your personal data. They can then use this to try to fake a transfer of the property to themselves, which they would then register at the Land Registry, or to secure a loan against it.

Using a reputable estate agent, who will screen buyers and conduct financial checks before accepting an offer, reduces this risk. Being in close contact with your solicitor will help you pick up on any early warning signs that your transaction is not progressing as it should.

You can also sign up to the Land Registry’s free property alert service at HM Land Registry - Property Alert. You will then receive an email notification if someone applies to register a charge or transfer of your property. This gives you the opportunity to pre-empt the fraudster.

Buy-to-let scams

It is not just homebuyers who can fall foul of scammers. Investors, even seasoned ones, can become victims too.

In one ruse, the fraudster markets a pre-let investment property. They ask would-be buyers for a deposit. Only later does the buyer discover the property either does not exist or is not as described, but by this time the fraudulent seller will have disappeared. Sophisticated schemes may involve the development of multi-unit buildings with ‘guaranteed’ income streams. The fraudster may even show you the development site. However, there is no intention to build out, no pre-lets agreed. Once the company has sold all the units off plan, it goes into administration. It never completes the development, leaving the investors unable to recover their funds.

So, if you are looking to invest in property, always do your research thoroughly. Only use reputable platforms and agents, and do not part with any money before an agreement is in place. And, most importantly, always take legal advice before committing yourself.

‘We buy any house’ scams

You may have seen companies advertising that they will buy any property, usually for cash. If you need to sell yours quickly, you may consider approaching one of these organisations.

Some of these companies are reputable, although the price they will offer is still likely to be well below market value. However, unfortunately, this is also an area rife with sharp practice and fraud. In some cases, the companies themselves are shams; an elaborate way of harvesting your data or stealing your identity. Others may fraudulently undervalue your property, add on hidden fees, or reduce the purchase price just before exchange of contracts. 

Before selling to one of these companies, you should consider carefully other options, such as a conventional or auction sale. Research any company you are considering thoroughly and make sure you have a realistic idea of what your property is worth on the open market. Do not sign any agreement until you have discussed it with your own solicitor, not one ‘recommended’ or introduced by the house buying company but someone who is independent and who will put your interests first.

Rental deposit scams

If you are renting a property, perhaps in between your sale and purchase, you should be alert to the increase in fraudsters posing as landlords. Typically, the bogus landlord will offer you a property, which is already let or does not exist. A common ploy is to clone the details off Rightmove or another portal. They will try to pressure you into paying a holding deposit or rent upfront - before vanishing with your money.

Fraudsters can also target landlords. Posing as a genuine tenant, they pay the deposit, or first instalment of rent, but deliberately make an overpayment, usually by cheque. They ask for reimbursement. However, their original payment never clears. They then disappear having pocketed the reimbursement, leaving the landlord out of pocket.

Always trust your instincts and follow up on anything you find unusual. Using an accredited agent, who subscribes to the Property Ombudsman Scheme, should give you additional peace of mind.

How we can help

Fortunately, most property transactions proceed untroubled by any hint of fraud. For those affected though, the effects can be devastating. If you are a victim, you may be entitled to compensation, for example, through the Land Registry’s indemnity fund or the Authorised Push Payment Reimbursement Scheme. Even so, this may not address the emotional effect of fraud, nor the impact it could have on the timely progress of your transaction. So, it is important to do everything you can to protect yourself.

You can be confident that at Sills and Betteridge, we have robust systems in place to minimise the risk of fraud. Just as importantly, we pride ourselves on our approachability. If you have any doubt about something you have been asked to do, or any aspect of your transaction, our advice is always to speak to us first.

For further information, please contact Edward Sharpe in the residential property team on 01522 542211 or ESharpe@sillslegal.co.uk. Sills and Betteridge has offices across Lincolnshire, Yorkshire and the East Midlands.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.