It’s sad to know that there’s barely a single aspect of life that criminals won’t try to turn into an opportunity – and property is no exception.
In what follows, we’ll examine two of the most common types of fraud and some of the measures you can take to reduce the chances of you becoming a victim.
Bogus property investments
Financial fraud is as old as history itself. Investopedia relates the case of insurance fraudster Hegestratos who committed his crimes in ancient Greece – around 300 BC.
In the modern world, probably the most frequent financial scam is bogus investment. It typically involves somebody asking you to invest in property (often buy-to-let) or land. The returns promised are often exceptionally attractive and the risks are portrayed as low to non-existent.
The scam is rarely confined to a hopeful telephone call made to your home. Quite often the crooks operate from well-appointed (though short-term rented) offices. They might also run large-scale extravagant seminars and conferences in major venues such as luxury hotels.
In some cases, some of the people you might see around the office are totally unaware that criminal activity is being perpetrated – they genuinely believe they are working in a legitimate capacity.
If you go forward and hand over your money by way of an investment, you may subsequently discover that:
- the investment property in question is derelict and uninhabitable;
- in some instances, the property might actually have been demolished since the photographs were taken;
- planning permission to convert the dwelling into, say, an HMO (House in Multiple Occupation) has already been refused; or
- the land being proposed for purchase and development of residential property is currently zoned for agriculture, with little or no prospect of it ever being approved for building purposes.
By the time you have discovered the true nature of the proposition, your money will have disappeared, along with the proposing company and their apparent business.
Identity theft
Incredible as it may sound, there are people who will steal information in an attempt to “prove” that they are, in fact, you!
Armed with that false evidence of identity, they will then use it to do something such as making an application for a second mortgage on a property you own. If the application is approved and the requested funds are advanced, the criminals will then quickly disappear – never to be seen again. Instead, you will be left with the considerable confusion and the costly expense of legal action in trying to resolve the mess.
In practice, many such cases only go to show how difficult it is to prevent such identity theft when other people are pretending to be you. You are likely to be surprised by just how much information about you – your background, who you are, where you live, and what your work is – is hardly secret but readily available in the public arena.
As the charity Age UK warns, even individuals who have plenty of experience in making investments of one kind or another still fall prey to scammers and fraudsters.
Defences and solutions
To carry out their crimes, these crooks often rely on institutions, organisations, and individual victims, who fail to conduct sufficient and necessary checks and due diligence before parting with their money.
That’s why criminals typically prefer properties that are unoccupied before attempting the identity theft of the owner. Properties that are remote or otherwise difficult to access are also more difficult for unsuspecting potential investors to check out and verify before falling foul of some investment scam.
There are several steps you might take to reduce the risk of your becoming a victim of this type of fraud:
- do whatever it takes (or get someone else you trust) to view a property or land before investing in it;
- check the facts of the property or land through the Land Registry, local press, and the local authorities, well in advance of making a final decision about investing; and
- make sure any property you own is duly registered with the Land Registry and that you have requested immediate and direct communication about that registration if the property is put up for sale. You can also specify that it cannot be sold or offered as security on any loan or mortgage without written confirmation from your solicitor – with your solicitor under the necessary instruction also to confirm your identity.
The government has helpful advice on this and related subjects – it’s well worth reading.
