property fraud

How to protect yourself from property and payment diversion fraud

The shift towards online conveyancing has unfortunately led to a rise in property and payment diversion fraud. Land Registry documents are now readily available online making it easier for fraudsters to use the documents to their advantage.

This rise is seeing property owners and potential property owners out of hundreds of pounds. For example, one buyer has been scammed into handing over £640,000.

The Law Society has joined the National Economic Crime Centre and Action Fraud to increase awareness and help people take preventative measures. We look at how you can protect yourself from payment diversion and property fraud.

| What are the different types of property fraud?

Property fraud covers a range of behaviours and activities. From using false identity documents to obtain payments, to illegally transferring the ownership of a property.

  • Identity theft

A fraudster can use the identity of anyone involved in a conveyancing transaction. This can include, for example, the homeowners, the solicitors, or the mortgage lenders. They may pretend to be a buyer of a property using a fake identity, proceeding with a transaction with no intentions to buy. Instead, they will use the information they have gained of the seller to allow them to impersonate the seller in the future.

  • Payment diversion fraud

Similarly, fraudsters may impersonate conveyancers and solicitors by using fake email addresses and letterhead to send out their own bank details. They may even go as far as registering a fake sub-office with the SRA. This will mean that homebuyers will send payments directly to these fraudsters and will lose out on potentially whole life savings and their dream home.

  • Title theft

Fraudsters can also acquire property by using forged transfer documents. By impersonating the registered owner, the fraudsters can sign documents using fake witnesses and register these with the Land Registry.

  • Investment scams

There are many investment scams circling, convincing investors that they can get rich quick and then leaving them with nothing. For example, fraudsters may advertise a plot of land as having investment potential; however, the plot may not exist or cannot be built upon. Or they may advertise an investment property for sale as having good investment potential and rental income, however the property may be in ill condition, costing hundreds in repairs.

| Who is at risk of property fraud?

Anyone can be a target of property fraud, however there are some homes that are more vulnerable than others, these include:

  • A vacant property
  • A rented property- particularly if the homeowner lives overseas
  • A mortgage-free property
  • A previous victim of identity theft
  • An unregistered property.

| How to minimise the risk of property and payment diversion fraud

  • One of the best ways to reduce the risk of your property being subject to fraudulent activities is to ensure that it is registered at the Land Registry with the most up to date information.
  • Additionally, when registering a property, you can add a restriction to the register namely the Form LL Restriction where a property cannot be disposed of unless a certificate is signed by a conveyancer or solicitor, confirming that the person who is disposing of a property is the same person as the Registered Proprietor.
  • The government has set up a free property alert service, which allows homeowners to monitor registered properties for any significant activity. For more information on the service, watch this short video from the Land Registry.

  • Be extremely vigilant. Law firms rarely change their bank details. Never send a payment to your conveyancer/solicitor without confirming their bank details over the telephone or in person. Similarly, if you receive an email from your acting firm that they have changed their bank details, ensure that you check this with your firm over the phone or in person.
  • If you still feel unsure about making a large payment, send a smaller payment to the acting firm first, then call to ensure the payment has been received.
  • Carry out your research before purchasing an investment property. If it sounds too good to be true, it probably is.

| What to do if you fall victim to property fraud?

  • Contact your bank- advise your bank of the fraudulent activity and request that the receiving bank freezes the funds.
  • Advise your solicitor- particularly if the fraudsters posed as your solicitor. This will allow them to investigate and take preventative measures.
  • Contact Action Fraud– by calling 0300 123 2040 or using their website.

At Levi Solicitors, our property and accounts departments are alive to the risks of property and payment diversion fraud. If you have any queries regarding your transaction or payment, please contact your conveyancing team direct, or call our head office on 0800 988 7756.


Leasehold

Buying a Leasehold Property Q & A

Beth Haigh, a trainee solicitor in our Conveyancing department took part in the Buying a Leasehold Q & A Solicitor Chat.

What are the main differences in the conveyancing process between buying a freehold or a leasehold property?

The term freehold refers to owning a property outright and forever. The term leasehold refers to owning a property for a set period of time. At the end of the term you will hand it back to the freehold owner.

The conveyancing process is likely to take longer if you are purchasing a leasehold property. This is due to the legal work required before you are able to complete.

A Management Company is often involved when purchasing a leasehold. The Management Company oversees the maintenance and repairs of the common parts of the property. Your Conveyancer will require a “Management Pack” from the freeholder / Management Company. This should contain statement of accounts, buildings insurance and risk assessments. This can take considerable time for the Management Company to put together and for the Conveyancer to review.

You should consider the number of years left on the lease at the time of purchasing a leasehold property. You will be entering a lease agreement for the remainder of the term specified in the lease. Most mortgages will not provide borrowing on a leasehold property with a term of less than 70 years.

Most freehold properties do not have a Management Company because maintenance obligations are on the property owner themselves. Therefore, the process can generally be quicker however, there may be a few obstacles to overcome. For information on why a freehold property may have a Management Company involved, read this blog.

| What are the main differences in owning a freehold and a leasehold property, and what is commonhold?

There are a number of differences between owning a freehold property and a leasehold property.

When owning a freehold property you own the property essentially own the property forever, until of course you sell the property or otherwise dispose of it. Most houses are usually freehold however not all, some houses can be leasehold such as some new build and shared ownership. Most flats and apartments are leasehold.

When owning a leasehold property you only own the property for a certain number of years (term), this can vary and depends entirely on the lease.

A commonhold allows a person to own part of the freehold title, such as a flat in a block. The freeholders own the common areas collectively. This means there will be no restrictions on selling or transferring the property and ownership of the cannot transfer back to a landlord.

| What impact will the Leasehold Reform Bill have on future leaseholders?

The Leasehold Reform (Ground Rent) Bill is part one of the Governments attempts the reform leasehold. The Bill is set to reduce Ground Rent for newly created long residential leases to one peppercorn per year. This effectively means that Ground Rent will have no financial value. The effect of this is to make leasehold ownership more affordable for future leaseholders. However, there is no indication as of yet when this will become law.

| What impact could the Building Safety Bill and the Fire Safety Act 2021 have on leaseholders?

The Building Safety Bill introduces tougher and more stringent requirements for residential buildings, particularly high rise buildings. It comes following the Grenfell Tower tragedy in 2017 and will ensure that high risk buildings are safer and will place greater responsibility on those designing and constructing buildings to ensure that the building is safe for occupation.

Additionally, following Grenfell, the Fire Safety Act (amending Regulatory Reform (Fire Safety) Order 2005) was also introduced. The intention of the Act is to improve fire safety in multi-occupancy residential properties. It essentially provides that external walls of a building and the fire doors to individual flats must be assessed as part of the requirement for a fire risk assessment.

The aim of the Bill and the Act is to ensure the upmost safety for future Leaseholders of high risk buildings.

| I own a leasehold property which passed all safety inspections before completion. The cladding has since been deemed unsafe. Who is liable for the costs to make the necessary replacements?

Usually when landlords carry out major works to blocks of flats, leaseholders are liable to pay a contribution towards the cost of the works. This depends on the provisos in the lease agreement. The landlord will collect a service charge and the cost may be substantial. The Government has made attempts to assist leaseholders with the costs for any remedial works and they initially set up a £5bn ‘Building Safety Fund’ allocated for this work. However, the deadline for registering for this has now passed. The Government has also discussed a loan scheme stating that leaseholders should pay no more than £50 a month towards cladding removal. However, the Government has yet to introduce this scheme.

For more information about buying a flat or other leasehold property, contact our team on 0800 988 7756.


stamp duty holiday extension

Budget 2021: Stamp duty holiday extension

On 3 March 2021, the Chancellor made his budget speech. Within this, he announced an extension to the Stamp Duty Holiday that was due to end on 31 March 2021. The extension tapers the stamp duty holiday as follows:

  • No standard Stamp Duty Land Tax (SDLT) will be payable on the first £500,000 of the purchase price. This applies to purchases of residential property purchased in England that complete on or before 30 June 2021.
  • For purchases that complete between 1 July 2021 and 30 September 2021 inclusive, no standard SDLT will be payable on the first £250,000 of the purchase price of any residential property purchased in England.
  • Standard SDLT rates will apply to any part of the purchase price that exceeds these amounts.

Purchases that complete after 30 September 2021 will attract standard SDLT at the normal rates.

What does this mean for house purchasers?

This is no doubt a huge relief for many home buyers with ongoing transactions; especially those at early stages or with stalled transactions where the chances of completing before the original deadline of 31 March 2021 were slim.

SDLT surcharges for second homes and investment properties and non UK resident purchasers remain unaffected and applicable.

Find out here how the extended holiday will affect you.

First time buyers

Even after the Stamp Duty holiday has ended, Stamp Duty relief may still be available for first time buyers. For transactions completing after 30 September 2021, qualifying first time buyers will not pay standard SDLT on properties with a purchase price of £300,000 or less. If the purchase price is more than £300,000, SDLT still applies on the portion of the purchase price for the property exceeding £300,000. First time buyers buying properties with a purchase price of over £500,000 will not be entitled to any relief.

How will the stamp duty holiday extension affect my purchase?

If you already have a purchase ongoing, your solicitor or conveyancer will be able to advise you on how this might affect you specifically.

Generally, however, if you were already aiming to complete your property purchase at the end of March, you should be able to proceed as planned. If you and the chain are ready for agreed dates, there should be no need to make any changes. However, if you do want to make any changes, you should advise your solicitor or conveyancer as early as possible.

If you are considering buying a property this year, this extension gives you the opportunity to pay a reduced amount of (or potentially no) SDLT. We do recommend, however, that you have sufficient funds to meet any potential SDLT liability you may have in the event the deadline(s) cannot be met.

Get an instant conveyancing quote online or speak to one of our team on 0800 988 7756. We have offices in Leeds, Wakefield, Harrogate and London. However, we also offer a distance conveyancing service, which means that we can bring our experience and knowledge to your house move, no matter where you are.


new build first-time buyers

New build conveyancing for first-time buyers

A step-by-step guide

Purchasing a new build property can be a whirlwind of emotions, least of all if you are first-time buyers. From mortgages and buyer initiatives to conveyancing and stamp duty, there’s a lot to consider. But don’t panic, we’ve put together a list of a key steps below:

1. Your mortgage

Obtaining the right mortgage is vital. You may need to do quite a bit of research to determine the best lender for you. You may find it useful to seek guidance from a specialist new homes mortgage adviser as they will assist you when finding a suitable mortgage.

Consider obtaining an Agreement in Principle at the earliest opportunity as this will allow you to budget effectively and purchase a property you can afford.

2.Buyer initiatives

There are a several schemes available which are designed to assist you to get on the property ladder. These include:

Shared ownership

This allows you to purchase a share of your dream home from a Housing Association and pay rent on the rest. You must, however, meet the eligibility criteria, so research is essential before considering this option.

Help to Buy equity loan

Help to Buy equity loans are set up to assist first-time buyers to buy their first new build home. An equity loan allows you to pay a deposit of 5% of the purchase price, with the Government providing a loan of up to 20% of the purchase price to assist with the purchase of the property. The Help to Buy equity loan is interest free for the first five years; and thereafter interest will be charged on a monthly basis. From year six, it is an “interest only” loan. This means that your monthly payments only cover the interest and do not reduce the capital loan.

You can only use a Help to Buy Equity Loan to purchase a new build home.

Until recently, to benefit from an equity loan, the builder would need to finish your new home by the end of December 2020. As a result of delays to building because of the Covid-19 pandemic, the Government has extended this to include homes built up until 28 February 2021. You will need to complete the purchase by 31 March 2021.

Lifetime ISA

This type of ISA is available to anyone aged between 18 and 40 purchasing their first home in the UK. These are offered at most banks and allow first-time buyers to save money to contribute to the purchase of your home whether new build or an older property. You can contribute any amount to your ISA at any time or pay one lump sum of up to £4,000. Then, at the end of each year, the Government will contribute up to a £1,000 bonus to use towards your purchase.

3. Instructing a solicitor

The next important step is to instruct the right solicitor. Your solicitor will conduct all the legal work on your behalf and act as an agent between you and the seller.

Our experienced conveyancing team are happy to offer you a quotation whether you are purchasing a new build or second-hand property. We have a wealth of experience in dealing with all property transactions and will ensure that you are allocated to the solicitor with expertise to handle your purchase.

4. Exchange of contracts

This is the most significant step in the conveyancing process; and it is the point where your sale or purchase becomes legally binding. Once you have exchanged contracts you have made a legal commitment to purchase the property.

If you are purchasing a new build property, there is usually an exchange deadline to work towards. The deadline will be noted on the Reservation Form that you complete at the point of reserving your property.

Exchange of contracts will not take place until you and the contract are completely prepared, and any enquiries are resolved. We will advise you whether it is a condition of your mortgage to have appropriate buildings insurance in place either at the point of exchange of contracts or before legal completion takes place.

5. Stamp duty

There is currently a stamp duty holiday, which is due to end on 31 March 2021. This means that home buyers do not have to pay any stamp duty on properties costing up to £500,000. The rate of stamp duty for properties over £500,000 has been significantly reduced.

We understand that from 1 April 2021, stamp duty will go back to its pre-Covid rates. This means that first time buyers get a reduction on the stamp duty payable on properties up to £500,000. Properties costing less than £300,000 attract no stamp duty for first time buyers, with 5% payable on the price between £300,000 and £500,000. If the property costs more than £500,000, first-time buyers will pay the same rate of stamp duty as previous homeowners. Stamp duty has to be paid within 14 days of legal completion of a property.

You can calculate how much stamp duty you could be paying here.

6. Legal completion

Congratulations, you are now officially a homeowner! Legal completion can take place at the same time as exchange of contracts but can also be some time after, particularly if you are purchasing a new build.

Patience is key when purchasing any home, as overall it can be a lengthy process. However the most important thing to remember is to trust the whole process as your solicitor only has your best interests in mind. Get an instant conveyancing quote online, or call us on 0800 988 7756.


moving home

Moving home during the Coronavirus pandemic

Moving home under normal circumstances can be one of the most stressful and hectic times. However, the current Coronavirus pandemic makes moving home much harder. We, understandably, receive several questions about moving home during the pandemic each day. To provide some much-needed clarification, I will provide the answers to some of the most frequently asked questions.

I have exchanged contracts, what will happen if we go into lockdown?

Exchange of contracts is a legally binding transaction. Once exchange has taken place, the buyer and seller are both committed to the transaction and completion is to take place on the date agreed in the contract. Solicitors may include provisions in the contacts to manage any risks of a lockdown. This is known as a ‘Covid Clause’.

The current Standard Conditions of Sale state that in the event a party to the contract defaults on completion then the willing party are able to serve a Notice to Complete. This allows the defaulting party 10 days to complete with penalty interest paid (or deducted). The defaulting party must complete within this time frame. Failure to complete could mean the buyer will lose their deposit; the defaulting party could pay damages; and the other party could contract could be withdrawn, unless the non-defaulting party takes a ‘good faith’ view.

Do I still have to pay stamp duty?

The Government the government introduced a stamp duty “holiday” to boost the property market. The current threshold for stamp duty is £500,000, which means that if you purchase a property for less than this amount then there will be no stamp duty to pay. This applies until 1 April 2021, thereafter the threshold will be £125,000 for residential properties.

You can find out how much stamp duty you will have to pay using the online calculator.

What if my mortgage offer has expired?

On 26 March 2020, mortgage lenders began offering an extension to existing mortgage offers of up to three months. The extended offer will keep the original terms of the existing offer and simply change the expiry date of the current offer.

There are however still some risks that the offer may be withdrawn if your financial circumstances change, for example a job loss, change to income or drastic materialistic changes to the property. If this happens, the lender reserves the right with draw their offer.

How are ID and verification checks carried out?

During lockdown there was some relaxation to the way in which ID checks were carried out and certified in our office. We carried out ID checks over live video link, to ensure the safety of clients and staff. However, as restrictions have eased, we carry out ID checks within the office. Please remember that you must always wear a face covering unless exemptions apply.

Of course, restrictions and Government advice are changing all the time. Should circumstances change, we will advise you on any new procedures for ID checks.

Will the transaction take any longer?

Although buying and selling properties can now continue in some kind of normal way, there is still a lot of uncertainty with regards to the length of time taken to complete the transaction. The length of time may be longer than usual and there may be some delays. We will work to ensure the transaction runs as smooth as possible, however we may experience delays from third parties. For example, it may take longer than usual to obtain search results, responses from lenders and delays from other third parties.

We understand that moving home at the moment may seem extremely stressful. However, do not let this put you off. Your conveyancer will help you every step along the way. Rest assured we are all working as best we can, after all we’re all in this together.

If you would like to speak to one of our conveyancers, please call us on 0800 988 7756. Alternatively, you can obtain an instant conveyancing quote online.