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Top tips to help protect yourself against property investment fraud

Many people invest in property or sign up to investment club arrangements, which are not uncommon in the industry, but sometimes it turns out that they are based on fraudulent origination or closing practices.

Research shows that property fraud in this country is on the rise with the cost of attempted property fraud amounting to more than £130m last year, and so potential property investors, incluidng buy-to-let landlords, naturally need to be extremely vigilant about fraudulent investment property schemes.

To help protect against property investment fraud, Alexandra Morris, managing director of MakeUrMove, offers the following tips:

Do your research

Many landlords look to property investment as a way to save extra funds for retirement. Although pension cold-calling has recently been banned, you could still be contacted by companies about property investment opportunities.

If a company does contact you out of the blue, before you agree to anything, you should do some research into the company. Not only that, but dig down into the investment opportunities they are offering. Through searching online, you’ll be able to easily and quickly identify whether these companies already have a reputation for scamming people.

Be aware of land banking

The UK is currently seeing a strong increase in the number of Build to Rent homes under construction. It’s not just in London either, as Build to Rent homes are also springing up across the whole of UK.

Build to Rent homes can be seen as an attractive investment, as they are built specifically with tenants in mind, featuring communal areas to create a real tenant community, onsite maintenance teams, and located close to city centres and public transport.

However, there is the risk of the build to rent land being ‘land banked’. You may be told that if you invest a large amount into a small plot of land now, its value could increase with planning permission. However, you may find that you have paid an inflated price or you may not be able to have planning permission granted due to it being in an area of natural beauty.

Not all land banking is necessarily a scam, but you need to make sure that you know any restrictions associated with developing the plot of land you are buying before you hand over any money.

Sign up to Property Alert

Properties that are not registered with the Land Registry are said to be more vulnerable to fraud.

The HM Land Registry has a handy and free Property Alert service which can help you feel more secure if you think your property could be at risk from fraud.

Once you are signed up to the Property Alert service, you can monitor your property and get email alerts when any activity associated with your property occurs. For example, if a mortgage lender does a search on your property, but you haven’t been in talks with them, this may be classed as suspicious activity. This allows you to swiftly take action.

Protecting yourself from property investment fraud

The most important thing to remember is that if something seems too good to be true, it probably is.

If you think you’ve been the victim of a property investment fraud, you should contact Action Fraud immediately. They will be able to provide the best advice for next steps.

Poll: Were you ever a victim of property investment fraud or a scam?

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