Motion made, and Question proposed, That this House do now adjourn.—[Tony Cunningham.]
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, it 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.
I congratulate the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on securing this debate. He is right to say that his efforts on behalf of his constituent—and, indeed, those of other hon. Members, including my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart)—have helped to highlight the possibility that there could be a problem of public confidence in the system. Much as I venerate this House, however, he is not right to say that it was the fact that this debate was taking place that caused the Land Registry to take action. The right hon. Gentleman should be aware from previous answers to written questions that the Land Registry is constantly reviewing its procedures to tackle fraud: it has done so in the past and will continue to do so in future. Nevertheless, I would like to thank the right hon. Gentleman for bringing this matter so persistently to our attention. He has done a good service to his constituents and I am sure that they will be duly grateful.
The Land Registry regards public confidence as essential to its operations. That is why it has taken the steps that it has. I shall come on to them shortly, but before doing so, I would like to reassure the House that the Government take fraud very seriously. It is a very serious issue and the Government are engaged in a variety of activities to reduce identity fraud, which is often an important element of frauds affecting title to land. It is for that reason that in 2003 the Home Office established the Identity Fraud Steering Committee to work with public and private sector organisations to identify and implement cost-effective measures to counter identity fraud. In 2007, the Fraud Act 2006 came into force, replacing the complicated array of overlapping deception offences under the Theft Acts and establishing a new general offence of fraud and a number of specific offences to help the fight against it.
Turning now specifically to fraudulent transfers of land, the Land Registry takes fraud very seriously and gives the highest priority to countering fraudulent registrations. It has a central role in the property conveyancing process and it deals with a great quantity of registration work every day, which is fundamental to this country’s property market.
It is important to put out the right figures, as they help to place these frauds into context. There are currently more than 21 million registered titles. In each of the last three years, the Land Registry received around 5 million registration applications, of which around 4 million were to register transfers for value and mortgages. That was in addition to even greater numbers of applications for searches and for official copies of the registers, plans and other documents that the Land Registry holds.
Sadly, no system has yet been devised that is immune to fraud—and that applies to the public and the private sector. What the Government must do—the right hon. Gentleman rightly draws attention to it—is to remain always and constantly vigilant. When fraudsters find a way into the system, we must react quickly and rapidly to stop them, which is precisely what happened in this case.
Regrettably, forged transfers occasionally get through the registration system and a property owner finds that, through no fault of their own, as in the case of the right hon. Gentleman’s constituent, someone else has wrongfully been registered in their place. Where that happens, the true owner will normally be entitled to be put back on the register as the proprietor. If for any reason that cannot happen—it might be the case where an equally innocent buyer has bought the property from the fraudster—the owner will be entitled to compensation from the Land Registry for any financial loss that they have suffered. In any event, under the statutory compensation scheme established by the Land Registration Act 2002, any costs incurred as a result of the fraud will be recovered.
Over the last three years, the Land Registry has paid statutory compensation as a result of fraud on a total of 70 claims—15 in 2004-05, 31 in 2005-06 and 24 in 2006-07. The total amount paid on those claims was approaching £12.5 million, of which more than £8 million was paid as the result of one very serious fraud. The Government do not take these sums lightly and neither does the Land Registry. We are not complacent about this at all. As a former Treasury Minister, however, the right hon. Gentleman should be aware that this is not taxpayers’ money. The Land Registry operates as a trading fund and, as such, the money comes from fee payers who use its services.
Although the numbers of frauds are relatively small, the fight against fraud is recognised by the chief land registrar and the Land Registry board as a top priority. It has a robust anti-fraud strategy in place and it will keep that strategy constantly under review, revising it as it deems necessary. The Land Registry has always had measures in place to help detect and prevent the registration of fraudulent applications. In accordance with its anti-fraud strategy, it is reviewing and revising them with a view to strengthening the protection provided. It is doing so in the context of the increase in, and apparently changing nature of, fraud.
In the past, the Land Registry’s experience of property fraud was that it was most commonly of a domestic nature. The more recent experience, to which the right hon. Gentleman has alluded, has been of fraud carried out by professional criminals who target properties of people who are unknown to them. It would clearly be inappropriate, as I hope that he will understand, for me to give details of the specific measures being implemented by the Land Registry. I can say, however, that it is working with the police and other relevant organisations to refine its strategy and develop expertise in this field.
In all its anti-fraud activity, however, the Land Registry must strike a careful balance between, on the one hand, making information accessible and facilitating the conveyancing process and commerce and, on the other hand, ensuring that there are appropriate safeguards in place to prevent fraud. Everyone would join me in regretting that the right hon. Gentleman’s constituent was one of the unfortunate victims of a forged transfer of property.
I am grateful to the Minister for his response so far. Now that deeds can no longer be downloaded from the registry, will the signature be redacted out when they are transmitted through the post, or will that still be available to potential fraudsters if they obtain the deeds in that way?
If I may, I will write to the right hon. Gentleman on the question of redaction. He raises an important point about the availability of other official documents online, and the possibility of redacting out signatures.
This is a complicated issue that also has implications for commerce and trade. The right hon. Gentleman intervened at an appropriate moment, because, as I was saying, a careful balance must be struck between the interests of the property market, which is important to the economy and well-being—[Interruption.] The hon. Member for New Forest, East (Dr. Lewis) is making gestures from a sedentary position—polite gestures, I hope. I will write to the right hon. Gentleman on the issue of redaction of signatures online, in other areas and through the post.
The right hon. Gentleman raised several specific questions relating to his constituent’s case, and the Land Registry has written directly to him on that case, which has now successfully been brought to a conclusion. We all regret that it happened in the first place, and that certain procedures had to be followed that protracted the process of restoring his constituent’s position. There are, of course, lessons to be learned from the case, as there are from all such cases. Those are being learned, and we will continue to be extremely vigilant.
It might be appropriate if I repeated at this point some advice that the Land Registry gives to property owners. Every proprietor of registered land must give the Land Registry at least one address to be entered on the register. That is the address to which the Land Registry will send any communications that it needs to send to the owner. It is important that that address is one at which the owner will receive the communications, and that that address is kept up to date as an address at which such communications can be received. That is crucial in helping to prevent fraud. Owners who so wish can have up to three such addresses on the register, one of which can be an e-mail address.
As we know, there has been recent public and media concern about the public availability of information from the Land Registry over the internet. Particular concern has been expressed about the availability in that way of copies of mortgages, which have on them the signature of the owner, and in some cases the mortgage account number or amount borrowed. The Ministry of Justice recognised that concern in a statement issued jointly with the Land Registry on 13 August. The public availability of Land Registry information was debated in Parliament as long ago as the late 1980s, and the register has been open since December 1990. The Land Registration Act 2002, which took effect in October 2003, extended the open register by making copies of mortgage deeds and leases available in addition to the register of title itself and other relevant documents. That was the subject of widespread public consultation at the time and was debated extensively in Parliament.
It is important that the public have a legal right to inspect the register of any title, and any documents that are filed in the Land Registry in relation to any title. There are a number of reasons for that. The open register assists the buying and selling of houses and land and other transactions with land. It assists business and commerce. It enables anyone to find out who owns a piece of land, which can be invaluable in, for example, cases of nuisance or neighbour disputes. It can itself be a safeguard against fraud, because it is transparent: no one can represent themselves as owning a property that is registered to someone else. In many other countries in the European Union and beyond, land registers have been open for much longer than they have been in England and Wales. In fact, an open register is the norm in countries with a land registration system.
There are a number of ways in which information can be obtained from the Land Registry. For instance, a written application can be made by post or in person at a Land Registry office, and information is available through Land Register Online, which was launched in 2005. The service has proved very popular with the public, and it supports the Government’s aim of making public information available electronically. However, owing to concerns that have been expressed about the availability of documents online—particularly the fear that it may have the potential to facilitate fraud—the Land Registry conducted a review. As part of that review, it engaged in discussions with the Home Office, the Information Commissioner’s Office and the Council of Mortgage Lenders. I hope that, despite what he said in his opening remarks, the right hon. Gentleman now recognises that the process has been continuing for some time.
The outcome of the review was the Land Registry’s decision to remove all documents from the Land Register Online service. The decision was put into effect at midnight on Monday, since when it has not been possible to view documents online in that way. As a result documents will be less readily available, and the Land Registry will have clearer audit trails to people who request the information. The documents will continue to be available through other means—for example, a written application made by post or in person at a Land Registry office—and will be available to solicitors and other registered business users who use the Land Registry Direct service.
The right hon. Gentleman asked questions about the police approach to frauds of this kind. As he knows, that is a matter for the Home Office rather than the Ministry of Justice, but I will ensure that my right hon. and hon. Friends at the Home Office are aware of his concerns, and will ask them to respond directly to him.
As I have said, I will write to the right hon. Gentleman about the signatures, and the redaction of them and other documents.
I have gone through the process at some length. I recognise the right hon. Gentleman’s concerns, as does the Land Registry, and I hope that what I have said this evening has gone a long way towards reassuring him and his constituent.
Question put and agreed to.
Adjourned accordingly at thirteen minutes to Seven o’clock.