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The Property Market Needs To Stay On High Alert For Fraud

The Property Market Needs To Stay On High Alert For Fraud

Fraud is a fact of life and the potential payoff for property-related fraud can be very high. This means that everyone involved in the property market needs to stay vigilant about it. Here’s a quick guide to what you need to know.

There are different types of property fraud

Some of the most common types of (attempted) property fraud include:

  • Money laundering
  • Investment scams
  • Fund interceptions
  • Identity theft

These can all be implemented in various ways. Ultimately, however, all frauds require you to trust someone who shouldn’t be trusted.

Money laundering

Money laundering tends to be an issue for property professionals to handle. As a regular buyer or seller, your only experience of this is likely to be having to provide ID. For completeness, it’s increasingly likely that this will be verified electronically. This is to protect against forgery, which is now highly sophisticated.

That said, it is not out of the question that you will find yourself approached by someone wanting you to act as a “money mule”. The simple way to protect yourself is just to say no. No matter what they offer you, it’s not worth the risk.

Investment scams

You can be targeted by an investment scam even when you’re not actively looking to buy or sell property. The way to protect yourself against investment property scams is the same as the way to protect yourself against investment scams in general. Make sure you do thorough due diligence before you decide whether or not to part with any cash.

In particular, be clear about whether or not the scheme is covered by any industry bodies or regulators. These do not guarantee that an investment is legitimate, let alone that it will be successful. They can, however, be a lot better than nothing.

Fund interceptions

Fund interception works by persuading the victim to transfer funds to a scammer rather than a legitimate recipient. The scammer often achieves this by pretending to be someone the victim knows and trusts. It may even be someone from whom they were expecting a legitimate bill.

As with investment scams, the key to protecting yourself against funds interception is to be sure you know who you’re dealing with. Find out both the contact details and the bank details of your legitimate key contacts (e.g. your solicitor) and only use those contact details.

Be aware that both phone numbers and emails can be “spoofed” (impersonated) as well as hacked. Always verify any contact by calling or emailing the known contact details. Never let yourself be pressured into taking hasty actions. Remember the old saying – act in haste, repent at leisure.

Identity theft

Your identity has a value, especially if you’re a homeowner (or about to become one). You, therefore, need to be careful to protect it. Here are some ideas.

Keep your mail secure

You may not get much postal mail these days, but you still need to ensure that what you do get is kept safe from prying eyes (and fingers). Once you’ve read it, shred it. If you don’t get enough mail to justify a shredder, then a pair of scissors will do. Just remember to cut finely and cut in both directions.

Protect all your devices

Any device with a mainstream operating system (e.g. Windows, macOS, Android and iOS) should have plenty of security software available for it. Make sure you at least download one of the free antimalware programs. Consider investing in one of the paid-for offerings. In particular, look for one with advanced message-filtering capability. This can help to protect you from scam emails.

For devices that don’t have proper security software, make sure you use a strong and unique password.

Use two-factor authentication whenever you can

Two-factor authentication combines something you know (your password) with something you have (usually a one-time code). It can do a lot to improve the safety of your accounts.

Please contact us for more information.

The March 2021 Budget And The Mortgage Market

The March 2021 Budget And The Mortgage Market

The latest budget was, unsurprisingly, a lot more focussed on COVID19 than on the housing market. It is, however, also important for property professionals. Here’s a round-up of the key points.

An extension to the Stamp Duty holiday

Arguably it was almost inevitable that the chancellor would need to grant some sort of extension to the Stamp Duty holiday. After all, the logic behind this is, fundamentally, exactly the same as the logic behind the recent extension of the current Help to Buy scheme. The construction industry has been badly hit by COVID19 and now also has to deal with the full impact of Brexit.

This has resulted in delays both to the construction of new-build properties and to the legal completion process. Rather ironically, the Stamp Duty holiday may have exacerbated the latter problem by stimulating activity in the housing market.

With buyers facing the prospect of losing out on the Stamp Duty holiday through no fault of their own, arguably, the government had to act. If it hadn’t then, at best, it could have had a lot of upset buyers on its hands come election time. At worst, it could have led to buyers pulling out of sales due to being unable, or unwilling to pay the increased Stamp Duty.

What is interesting is that Rishi Sunak chose to extend the holiday until the end of June. Then there will be a further three months where the threshold is set at £250K. This means that even new entrants to the market could potentially benefit from it. It also means that there could be another “cliff-hanger” in three and then six months time.

Help for “Generation Buy”.

Back in October 2020, at the (virtual) Conservative party conference, Boris Johnson announced his intention to turn “generation rent” into “generation buy”. He indicated that the government would achieve this by introducing a scheme to guarantee mortgages of up to 95% of the property price.

Fast forward to March 2021 and the chancellor has now indicated what this means in practice. Essentially, the government is bringing back David Cameron’s Mortgage Guarantee scheme. Like the old scheme, it will be available to onward movers as well as first-time buyers. It will also be available on purchases of existing property. The current limit is set at £600K.

ISAs stay untouched

Given that the adult ISA limits have been the same since 2017, it was always highly unlikely that the chancellor was going to feel under any obligation to increase them. The one change was that the penalty for making irregular withdrawals from the Lifetime ISA will be going back up to 25% in April. It was temporarily reduced to 20% to help those affected by the pandemic.

The chancellor did announce the introduction of new NS&I “green bonds”. These are intended to help the UK meet its target of becoming carbon neutral by 2050. At present, it’s unclear whether or not these will have any direct impact on the housing market.

It is, however, worth noting that the government’s commitment to its “net-zero” target requires a switch to electric vehicles. This in turn requires the development of mass-scale charging infrastructure. Areas that get ahead of the curve here could see local house prices rise accordingly.

Widespread tax adjustments

The chancellor’s largesse on Stamp Duty has not extended to other personal taxes. Capital Gains Tax exemptions, Inheritance Tax and the Pensions Lifetime allowance all stay at 2020/2021 levels. The tax-free personal allowance and the higher-rate income tax threshold both stay at 2021/2022 levels.

At present, these freezes are scheduled to stay in place until 2025. This effectively means that people could find their take-home earnings eroded over time. In itself, this does not augur well for affordability. On the other hand, much will depend on how well the economy performs overall.