As a landlord, your property is probably one of the most valuable, if not THE most valuable asset you own. This means that it is likely to be targeted fraudsters.
There are a number of ways this can be done. Below are three popular scams which you need to watch out for:
Fraudster tenants mortgaging your property
It is easy for criminal tenants to do this as they can (unless you take precautions) receive all correspondence regarding this at the property. An example of a case where this happened was Barclays Bank PLC v. Guy where the fraudsters first transferred the name of the property into their name and then took out a mortgage.
The Court held that although Mr Guy could have the property transferred back into his name at the Land Registry they could not reverse the mortgage as it had been made in good faith on information provided by the Land Registry.
The Land Registry have special services to protect landlords against this sort of thing.
- First of all you need to make sure that the correspondence address for the property is YOUR address and not the property address.
- Then you can sign up to get property alerts, if someone tries to change the register of your property, eg use your property for a mortgage
- Finally, you can register a restriction, which means that the Land Registry will not register a dealing with your property, for example a transfer or a mortgage, unless a solicitor or other professional conveyancer certifies that they have checked the identity of the person who has signed the deed.
Find out more about all this here.
Bogus landlords renting out your property
This is where a fraudster somehow gets hold of the keys to your property and then advertises it for rent.
In most cases the fraudster will be content with getting the first months rent and deposit upfront from the hapless tenant and will then scarper with it, leaving you to deal with the distraught tenant (often students are targeted in this way as they tend to be more trusting).
However, sometimes the fraudster will actually instal the tenant in the property and collect rent from them until the fraud is discovered.
Then as the owner of the property, you will have all the trouble of getting the tenants out so. This can be particularly problematic if the property is empty because you are trying to sell it – your sale will not be able to go ahead until you have vacant possession which means you will need to evict the occupiers.
To prevent this happening you need to be VERY careful not to allow anyone who you do not absolutely trust take away the keys for any reason. So, for example, don’t let prospective tenants view the property have the keys to view the property unaccompanied.
It may also be a good idea to change the locks from time to time anyway.
Criminals renting your property to turn it into a cannabis farm
This happens far more frequently than people realise, particularly in places like London.
It is a lucrative business for the criminals as they can earn many thousands of pounds from the crop. However, it is a disaster for landlords as your property will be badly damaged – for example frequently holes will be knocked into the walls for ventilation. It could cost you thousands to put right and you may find that this is not covered by insurance.
These properties are also at a much greater risk of fire.
The best way to prevent this happening is to be very careful about checking and referencing tenants. Be wary also of tenants who offer to pay large sums up front in cash and discourage you from visiting the property.
Generally, the criminals will want to be left uninterrupted in the property so it is well worth it to them to pay even a year’s rent up front if you then leave them alone.
It follows from this that you should ALWAYS inspect properties at least every six months and for new tenancies this should not be less than every three months.
If a property is converted to a cannabis farm it is generally easy to spot because of the smell. For more information see here.
The best way to prevent any of these is to be very careful.
- Make sure you take advantage of the Land Registry fraud prevention services.
- Don’t let the keys out of your hands to anyone you do not trust.
- And be VERY careful that you are not renting to criminal tenants who will use your property for criminal purposes (such as a cannabis farm).
NB This article was written as part of a HomeLet ebook initiative.