Property involves large sums of money and unfortunately, where there’s money, there are scams.
Here, we’ll reveal the most common types of property scam and tell you how you can avoid becoming a victim…
Types of property scam
To avoid becoming the victim of a property scam, it’s important you know what to look out for.
The most common property scams in the UK include:
1. Rental property scams
Tenants are often seen as easy targets by scammers and the impact of the pandemic has seen a rise in rental property scams.
In fact, it’s estimated that between February 2020 and February 2021, there were more than 4,000 reports of rental fraud with the victims suffering a combined £6million loss.
Rental property scammers use a variety of techniques, including:
Fake property listings
Only registered letting agents can list properties for rent on online portals like Rightmove, Zoopla and OnTheMarket.
But anyone can post a property on other sites like Gumtree, Facebook Marketplace or Craig’s List and on the various social media platforms.
Scammers often list properties that don’t exist, or they’ll steal pictures of a legitimate property and create a fake advert.
Tenants that show an interest are then asked to pay a certain amount of money to ‘secure’ the property before a viewing is arranged and the so-called landlord simply doesn’t turn up.
Fake letting agents and landlords
Some scammers pretend to be a landlord or letting agent and actually will show potential tenants around a spoof property.
They then request a deposit and month’s rent up front in cash, before the tenant even realises they’ve fallen victim to a scam.
Fake overseas landlords
Some fraudsters pose as overseas landlords and use the fact they’re not in the country to lure tenants into paying ‘holding deposits’ in advance of them viewing a property that doesn’t exist.
More sophisticated online property scams involve fraudsters who send out bulk emails pretending to be from a letting agency or a large property company.
The emails tell the recipients that they owe money or requests that they pay their rent through an online portal or over the phone due to a banking issue.
Fake printed listings
Although most tenants search for a property to rent online, some scammers will place fake newspaper or noticeboard advertisements and then ask for holding deposits to be paid over the phone before vanishing.
How to avoid rental property scams
There are steps you can take to avoid rental property scams as a tenant…
1. Never pay anything up front
Most rental scams rely on unsuspecting tenants paying holding deposits before they’ve viewed a property, only for the ‘landlord’ to then disappear.
Never pay any money up front – if someone requests a payment to ‘secure’ a property before you’ve seen it, walk away as this is not standard practice from legitimate landlords or letting agents.
2. The tell-tell signs a property listing is fake
Many online scammers are frustratingly good at what they do, but often there are tell-tell signs a listing is fake.
Be aware of:
- Property listings that don’t have photographs
- Listings that are badly written
- Properties where the monthly rent is much less than the market average
- Listings that ask for money up front before a viewing
3. Don’t accept excuses for not viewing a property
If the person you’re discussing a property with is making excuses as to why you can’t view it, you should be wary.
Common excuses include:
- The ‘landlord’ is overseas
- The property is having building work done
- The current tenants don’t want viewings taking place
Always view a property before even contemplating paying any money.
4. Be thorough
Scammers posing as letting agents can be rooted out simply by calling or popping into the branch.
If you’re dealing directly with someone who is posing as a landlord, insist on meeting them or try to visit the property without their knowledge to see if it exists or if current tenants are in.
5. Rent through a letting agent
The best place to start looking for a new property to rent is through a local letting agent – on their website or through one of the main online property portals.
Once you’ve found a property you like the look of, you can contact the agent and arrange a viewing.
And if you’re still wary, why not pop into the branch to discuss the property you’re keen on in person?
2. ‘We buy any house’ scams
The growth of companies who’ll offer to buy your house and complete the purchase in a matter of days has inevitably led to a rise in bogus ‘we buy any house’ firms.
These are the scams you should watch out for:
1. Lead generation scams
Many ‘we buy any house’-style companies are actually lead generation firms who simply want your data to sell on to third parties.
They’ll use a website or paid-advertisement landing page with a form to sign up and receive more details, before selling those details on.
2. Bogus valuations
Less genuine ‘we buy any house’-style companies will use their own valuers to lower their proposed purchase price of your property.
A genuine company will either use at least three independent estate agents to value your home, or they’ll use a Royal Institute of Chartered Surveyors (RICS) valuer, so you can be sure their valuation is accurate.
3. Additional fees
Most legitimate ‘we buy any house’ companies don’t charge any fees and many will even cover your legal costs when they buy your property.
Some scam versions, however, will add on late fees, often very close to completion day, when it’s too late for you to question them without jeopardising your sale.
4. 11th hour price reductions
Scam ‘we buy any house’ firms will often reduce their offer for your property at the last minute, citing a bogus reason for the reduction.
A genuine company will make their offer legally in writing at the start of the sales process.
5. ‘Lock-in agreements
Bogus companies will often try to lock you in to an agreement with them, meaning you’re unable to sell to anyone else if you have a change of heart.
Some also use ‘option’ clauses in contracts that mean they can sell your property through a third party or a lease option process and this can result in more costs for you as a seller.
How to avoid ‘we buy any house’ scams
Take these steps to avoid being scammed by a bogus ‘we buy any house’ company…
1. Never pay or agree to anything up front
If a company asks for money up front or requests that you sign an agreement with a ‘lock-in’ or ‘option’ clause, you should be wary.
2. Be aware of market values
‘We buy any house’-style companies will never pay full market value for your property.
So, if you’re being offered 95% or even 100% of your property’s market value, you may become the victim of a scam.
3. Do your research
Take a look at Companies House and check the company’s trading history and registered detail before doing business with them.
4. Look for accreditations
Genuine ‘we buy any house’-type companies are members of the National Assocation of Property Buyers (NAPB), as well as other trade bodies like the Property Ombudsman, so look out for these memberships.
5. Find genuine reviews
Check sites like TrustPilot or reviews.co.uk for online testimonials about the company you’re dealing with.
If they have only a handful of reviews, they’re not up to date or they have none at all, they could be a scam company.
6. Is it too good to be true?
If so, then it probably is.
If the company you’re dealing with is offering close to full market value for your home, or they’re promising to complete in an unrealistic period of time, you should be wary.
7. Sell your home through a local estate agent
The safest way to sell your home and achieve its true market value is through a trusted estate agent.
And if you really need to sell quickly, you could consider selling your home at auction.
3. Property investment scams
Landlords aren’t immune from scams, either, and these are the main kinds of fraud they should look out for:
1. Online property scams
Phishing and pharming see scammers steal personal information or upload malicious software to a landlord’s computer.
Often, a fake property investment website will be used to pharm personal information, while phishing emails are also sent to landlords with promises of lucrative property investment schemes to sign up for.
2. Telephone scams
This scam sees the landlord receive a call from someone claiming to be their letting agent.
The fake agent will request their bank details under the guise of a system failure or promising a refund of some kind.
3. Fake investment schemes
One of the most common ways landlords are targeted by scammers is through fake property investment schemes.
These are especially common overseas, where landlords are tricked into paying an up-front deposit for a property on a development that doesn’t exist.
How to avoid property investment scams
Landlords should take these steps to avoid becoming a victim of a property scam…
1. Question everything
Many scammers impersonate letting agents or other professionals over email or telephone.
So, landlords should:
- Check the sender’s email address – scam emails often have a different sender address to what you’d expect
- Look out for bogus links – hover over any hyperlinks within an email to show where they lead
- Look out for poor quality branding – scammers are usually unable to use high-resolution branding to replicate a letting agent, so keep an eye out for pixelated logos or colours that don’t match the agency’s
- Don’t give details over the phone – no genuine letting agent or professional body will ask a landlord for their bank details or other personal information through a phone call