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Property is Booming But Professionals Must Remain Wary of Mortgage Fraud

Friday, 2 May 2014

The UK property market has continued its surge upwards with London seeing a seventeen per cent rise in one year. As more buyers enter the market, mortgage lending has also been increasing at a rapid rate.

A growth in mortgage lending brings an increase in the inherent risk of more mortgage fraud. Professionals involved in the buying process such as surveyors and solicitors must remain wary to avoid getting caught up in scams.

Another Property Boom?

There can be little doubt that there is something of a boom occurring in the property market; whether it amounts to a bubble is a question for economists but only time will really tell.

The Office for National Statistics recently announced that London house prices have risen by 17.7 per cent in the year to February. Meanwhile the rest of the country has joined the party albeit with a more modest 5.8 per cent increase excluding London.

Figures published by the British Bankers’ Association showed a commensurate increase in mortgage lending, reaching its highest point since August 2008. The figures showed £11.5bn of gross mortgage borrowing occurred in February, a 47% increase on the same month last year.

Broadly speaking a housing revival is a good thing but professionals should remain vigilant.

Mortgage Fraud Opportunity

The SRA warns that criminals will exploit weaknesses in conveyancing and lending systems to carry out mortgage frauds. Unfortunately, due to money laundering regulations, solicitors acting for clients that commit mortgage fraud can become criminally liable even if they are not actively involved in it or even aware of it.

The last boom saw a huge number of mortgage frauds being committed, some of which are still making their way through the courts. One recent high profile case has seen a bank manager, a solicitor and an estate agent jailed for their part in a multi-million pound scheme.

Bank manager for First Trust bank, Peter Creegan, from Newry, with former solicitor Peter Brassil, and estate agent Damien Mallon, from Armagh, falsified mortgage applications totalling millions of pounds. The frauds took place from 2002 to 2008 during the last property boom.

All three men received jail terms following convictions for charges that included theft, false accounting, concealing criminal property and transferring criminal property.

The largest mortgage fraud perpetrated during the previous property boom saw Achilleas Kallakis and Alexander Williams scam banks out of more than £750m. In their case Judge Andrew Goymer suggested that Allied Irish Banks and Bank of Scotland were partly to blame for their losses by acting carelessly and imprudently.


Although many lessons have been learned from the financial crisis and the previous property crash; when the good times start to roll, memories can soon shorten. It is essential that solicitors and other professionals remain aware of red flags such as unusual circumstances regarding the identity of clients, opaque ownership of property or discrepancies in valuations.

For specialist advice contact Peter Gourri today by email or telephone 0207 611 4848.

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