Property fraud compensation costs soar to £26m

Property fraud compensation costs soar to £26m




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Criminals are taking out mortgages on property they do not own, leaving the real owners in thousands of pounds of debt.

The Land Registry has paid out more than £26 million since 2006, compensating victims of recurring property fraud, The Guardian reports.
 
The Registry paid out compensation for frauds of £4.51 million last year, the second-highest loss on record, as well as costs of a further £440,000, according to the department's annual report.
There were 53 cases of the fraud compensated in 2009-2010, down from 62 incidents in 2008-2009 when the loss totalled £4.23 million with costs of £815,000.
Patrick McCloy, director of title theft experts Gatekeeper Protection, told The Guardian: "Payouts may rise exponentially as victims often do not know they have been victims of fraud until they come to sell their property, which may be many years later. As such, it is likely that victims are 'building up' and gradually more and more are becoming aware of the problem and discovering they are victims."
The compensation figures, which relate to all frauds, much of which are believed to relate to title theft, have been growing steadily each year, with the exception of the £8.63 million loss the Registry sustained in 2005-2006.
Almost all of that was paid to the Candy Brothers and their bankers HBOS after the luxury property developers were swindled by four pensioners who sold them a 47-acre Berkshire estate that they did not own.
That claim dated back to 2004 when Nick and Christian Candy paid £6.5 million to a quartet of fraudsters in their sixties and early seventies, believing they were purchasing the King's Beeches estate in Berkshire.
It in fact belonged to a billionaire Saudi sheikh, Khalid bin Mahfouz, but forged paperwork lodged with the Registry suggested that the pensioners were the real owners.
A spokesman for the Registry told The Guardian: "Fraud has grown generally in the financial sector in recent years and there has been a growth in identity theft – almost two million people are affected by ID fraud every year.
"But we believe the majority of property frauds are perpetrated before registration: for example by impersonating the registered proprietor and obtaining a mortgage, a transaction which Land Registry would have no involvement with until after the money had been forwarded by the lender and the fraud had been successfully completed."
Prior to 2003 the Registry used watermarked land certificates to prove a person owned a property, but they were axed when records went paperless and were then made available to the public in 2006.
Under the new record system, all that is needed to sell or remortgage a property is a name and address. This means that anyone with the same name as the registered owner – John Smith for example – can deal with the property.
Buy-to-let properties without a mortgage are thought to be most at risk, as tenants can intercept post that might alert the owner to a fake mortgage application.
Despite this, the Registry has said that they “do not believe that abolishing certificates caused more fraud”.
However, according to internal Registry emails released under the Freedom of Information Act, the department has been avoiding publicly addressing the issue of land certificates. The confidential emails state that questions on the subject could lead to "unwanted questions of whether [their abolition] has contributed to registration fraud itself, which we have evidence to say it may have done".

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