Date of Proceeding: 07.11.2007
Reference: 467 c238-41
Member: Lilley, Peter
Title: Land Title Transfers
Description: I am grateful to you, Madam Deputy Speaker, and to Mr. Speaker for allowing me to have a debate on the fraudulent transfer of land titles of people’s houses.
Before I uttered a word, the debate has illustrated two important points. First, it shows the power of Parliament to hold the Government to account. Merely by putting down the debate on the Order Paper, you, Madam Deputy Speaker, have persuaded or provoked the Government to take action, which they previously seemed reluctant to do, to attempt to prevent the sort of fraud to which I want to draw the House’s attention. Secondly, the debate demonstrates constituents’ power, through their Members of Parliament, to influence Government.
I first encountered the sort of fraud that we are considering when a constituent came to my surgery and told me that he had let a property to another gentleman, who immediately downloaded the deeds of the house and copied the owner’s signature from the deeds on to a power of attorney, which purported to give the tenant the right to transfer properties on behalf of the real owner. The first transfer that he undertook was that of the ownership of the property that he was renting into his name. Having duly registered that transfer with the Land Registry, he went to a mortgage provider, took out a mortgage for £140,000 and, two days later, left the property.
My constituent only discovered some time later that the fraud had been perpetrated, when the mortgage company, finding that its mortgage was in default, had sent in the bailiffs who tried to repossess the property. The new tenant had warned the owner that that had been happening, and then the owner’s nightmare began. He had to convince the Land Registry that he was the true owner. To do that, he had to prove that the signature on the power of attorney was not his but a forgery. Having done that, he had to convince the Land Registry that he had properly investigated the tenant’s references before letting the property. I do not know why that should be a concern to the Land Registry, but he was able to do that.
Even when the owner had persuaded the Land Registry that he was the true owner and that the power of attorney and the transfer were fraudulent, it refused to accept liability for a long time or to return to him unencumbered possession of and title to his property. It argued that, because he had not informed it of his change of address, he had in some way contributed to the problems because any letter that it sent to him did not reach him. In addition, when he went to see the police and notified them that the fraud had taken place, they initially refused to investigate, saying that he was not a victim of fraud, that the mortgage company, if anything, was the victim and that they, therefore, would not register it as a crime. Furthermore, they told him that they did not investigate frauds involving only one person and less than £1 million. I am happy to say that, after months of effort, the police began to take the matter seriously and, more important, the Land Registry, perhaps after and because of my intervention, agreed to accept liability for the fraudulent transfer of my constituent’s property and to pay off the mortgage and return the deeds unencumbered to him. It has not yet done so, but I am confident that it will.
It is alarming that the case does not appear to be unique. My constituent discovered that the gentleman who had fraudulently stolen his property and the £140,000 mortgage on it subsequently went to Southampton and perpetrated a similar fraud. He did likewise in Cambridge before being arrested and, unfortunately, released. After he had transferred some of the money into gold, which was sent to Dubai, and transferred other money directly to Pakistan, the fraudster left the country.
The only solicitor to whom I mentioned the fraud is a friend who happens to be a partner in a leading London firm of solicitors. He immediately said, “Oh yes, we’re involved in similar cases.” After being in business for more than 150 years, the firm has suddenly discovered that the fraudulent transfer of title deeds is an issue. In particular, there is one fraudster who committed a dual fraud. First, he rented property. In this case, he did not use a power of attorney, but he was able to use the utility bills that he received as a resident of the property to help him to establish ownership and residence and fraudulently transfer the property into his name.
Emboldened by that, the man continued to occupy the property and pay the rent and the mortgage, and tried to perpetrate a similar fraud on the landlord’s own home when he discovered that the landlord would be out of the country for a period during the summer. Happily, the first fraud was discovered before the second could be completed, and the hope is that it has been aborted.
When I asked the Minister what the total number of such frauds was, he said that no record was kept of the total number of attempted or successful frauds, but there have been no fewer than 70 frauds over the past three years where the Land Registry has accepted responsibility and paid out on them. I understand from the excellent “You and Yours” programme that the total amount paid out on those frauds was of the order of £25 million. We are therefore talking about a serious problem that has a substantial impact on the public purse.
All those with whom I have discussed the issue, both victims and solicitors, have urged me to make it public. They have done so not primarily because they are concerned about the treatment that they have received-although in some cases they are angry about that-but because they want to ensure not only that others who discover that they have already been the victim of such fraud do not experience similar treatment from either the Land Registry or the police, but that in future such frauds are prevented altogether and that the public purse should be protected.
One person said to me, “We always talk about an Englishman’s home being his castle, but it seems to be possible to wake up and find that it’s someone else’s property.” Another said, “We talk about things being as ‘safe as houses’, but they’re only as safe as the title deeds.” They have a number of concerns about the issue. They want to ensure, first, that others do not experience such problems. They hope that the Minister will give an assurance that when such frauds are discovered in future, once the ownership is shown to be truly that of the victim they should not be forced to encounter the sort of problems and delays that my constituents experienced.
Secondly, the people I have spoken to want to be sure that the Government will not spend any more effort denying that the problem of such frauds exists, but instead spend more effort in preventing them from happening in future. Thirdly, those concerned are worried on behalf of the taxpayer, who has had to pay out millions of pounds already, with perhaps more in the pipeline. They do not share the complacency of Ministers, who seem to be saying, “What’s £25 million, given that the Land Registry has perhaps upwards of £1 billion of revenue over the same period?” As a former Treasury Minister brought up in the school of “Look after the pence and the pounds will look after themselves”, I believe that if Ministers are not prepared to look after the millions, the billions will not look after themselves. Ministers should have acted earlier to stem the loss, not waited until you, Madam Deputy Speaker, and Mr. Speaker put the issue on the Order Paper.
Fourthly, we want to know why the police are so reluctant to investigate such fraud unless it involves more than £1 million. In the fraud that my solicitor friend’s company was dealing with, the total value of the two properties was in the order of £1 million or more. However, because they were in different police districts, the police seemed reluctant to pursue the issue thereto. It sounds as though Government targets or some such factor are distorting sensible policing. If that is not the issue, and the police simply do not have the resources or the ability to pursue such fraud, should it not be referred to the Serious Fraud Office?
Indeed, one of my constituents has pointed out that, in most cases that we know about, the money has ended up in the middle east or Pakistan. Surely we should be doubly careful to ensure that this kind of fraud will not be used to fund extremist or terrorist movements, even if it has not been so used in the past. That alone should be a reason for the Serious Fraud Office to be involved.
I mentioned that the scheduling of this debate had provoked the Minister to announce that, as of the beginning of yesterday, it would no longer be possible to download deeds of properties from the Land Registry online. In future, people will have to approach the Land Registry either in person or by post, unless they are registered professional solicitors. We want to be sure that that measure will do the trick. I am afraid that, on its own, in might not be sufficient to do that. Naturally, we hope that it will, but this could be a question of too little, too late.
The measure will clearly stop signatures being downloaded from the Land Registry and being copied to obtain powers of attorney or used for other purposes connected to this kind of fraud, but it is extraordinary that such a unique personal identifier as a signature was ever made publicly available in this way. Should not the Government investigate whether other documents are available online from which signatures may be obtained, and consider whether those signatures could be redacted out, so as to allow the documents to remain available for public use? I certainly do not want to stop public access to any documents unnecessarily, but it might be sensible to arrange for any signatures to be excluded from them.
Also, there should be special checks where powers of attorney are used, not least where the beneficiary is the person exercising the power of attorney. The same is true when solicitors cited on a document are not registered with or known to the Land Registry. That was the case with the fraudulent power of attorney that was used to defraud my constituent. The firm of solicitors did not exist, but its name was on the documents and no checks were made. Furthermore, someone has contacted me to ask whether the change that has been made will mean only that the same frauds that have hitherto been perpetrated online will continue to be perpetrated by post.
I am worried that the Government have been more concerned to defuse the issue by making a change speedily, ahead of this debate, rather than, as I would have hoped, by announcing a proper inquiry into the measures necessary to prevent this kind of fraud and carrying out a proper consultation into the issue. A consultation has been taking place into other aspects of the Land Registry, but it has not focused on frauds of this kind. If a proper investigation were carried out, we could be sure that comprehensive measures would be taken to ensure that the public and professionals still had maximum access, at the lowest cost, to the data necessary to carry out legitimate property transactions, while ensuring that an Englishman’s home remained his castle and nobody else’s. I am grateful to the Minister for coming to the House to respond to the debate. I hope that he will give me the assurances that I have asked for, and that a proper examination of this problem will be carried out.