Nearly £10m worth of compensation claims were received by the Land Registry last year alone because of fraud or forgery, according to new data…

The Freedom of Information request from Titlesolv found that £23.3m worth of claims were received in 2014 by the Land Registry and overall since 2012, the Land Registry Indemnity Fund has received more than £59m in claims and paid out more than £31m against them.

The data also showed that 86% of claims were settled or paid by the Land Registry, rising from 78% of the claims lodged in 2012, but the actual proportion of the value of claims had dropped considerably.

Chris Taylor, Chief Executive of Titlesolv, felt that despite best efforts, significant amounts of money were being lost, with the Land Registry bearing the brunt.

“This is not likely to change anytime soon as many of the issues created pre-recession still lie dormant,” said Chris.  

“If interest rates go up, and more mortgages fall into arrears, the Registry is likely to face another wave of claims as defaults tend to reveal or highlight allegations of fraud.  

“If those mortgages become unenforceable, the Registry – and the public purse – are vulnerable to claims of negligence.”

Chris added that fraud was something which was not easily detected, meaning the responsibility fell on the Land Registry, solicitors and mortgage lenders to be as vigilant as possible and collaborate more to detect early signs.

“Ultimately, however, the principle of a State Guarantee on property titles places liability for title fraud squarely with the Land Registry, so it is clearly in its own interest to lead the charge in the fight against fraud and forgery,” added Chris.

“No doubt this will continue to be a key priority for the organisation, particularly as Graham Farrant has recently become its new Chief Executive.”

Ashley Ilsen, New Business Executive at Regentsmead, felt the key was to improve the current system without making it any more cumbersome and thought lenders needed to do their own due diligence.

“Whilst the lender may not ultimately be burdened with the cost of the fraud it would leave a sour taste having a client that was victim to one, so we always do everything we can to make sure they are well advised,” said Ashley.

“There also needs to be a clearer and quicker flow of communication between lenders and Land Registry, as often this is done at a stage when the fraud has already taken place.”

Bob Sturges, Head of Communications at Omni Capital, added that fraud was never likely to be eradicated and property transactions would remain a tempting target for the criminally-inclined due to the amount of money involved.

“To prevent falling victim, lenders must take it upon themselves to carry out the most robust due diligence possible,” said Bob.

“We now have at our disposal many effective tools, and whilst no system is fool-proof, most fraud is made possible, I would suggest, by lax systems or simple human negligence.”

Bob felt that where it could be proved that information had been supplied by a third party, a lender had a right to proper redress and the Land Registry had always accepted this point of principle and continued to suffer financially as a result.

"But most lenders would happily sacrifice the chance for compensation for a more reliable system,” added Bob.

“That's the challenge to which the Land Registry and other agencies must continue to rise if we are to defeat this toxic activity."