The stamp duty holiday has provided a great boost for the property industry, contributing to a ‘mini-boom’ in property sales that may also have had positive effects on the wider economy. But the rush to get purchases completed while they’re significantly cheaper has also led to a surge in property-related scams.
In fact, UK homebuyers lost huge amounts of money to scammers in 2020, and that trend seems likely to continue in 2021 as the end of the stamp duty holiday approaches.
How do the scams work?
The main scam affecting property purchases is authorised push payment (APP) fraud. Unlike other crimes where someone’s bank or card details are stolen, this is where the victim is tricked into voluntarily making a payment into the scammer’s account.
It normally starts with the person’s email account being hacked. The scammer can then intercept their emails and impersonate the buyer’s solicitor, providing their own bank details instead of the solicitor’s. When the deposit is transferred across, it goes to the wrong account and the homebuyer may not realise anything is wrong until they get a call from the real solicitor asking why the money hasn’t turned up.
APP fraud isn’t exclusive to the property industry, but the often pressured atmosphere of house purchases and the large sums involved put homebuyers at particularly high risk. One investigation by the Guardian last summer revealed a woman who had been conned out of more than £300,000 this way, and she very nearly didn’t get it back until her bank was held to account over their failings by financial professionals.
Why is the stamp duty holiday making people more vulnerable to scams?
The stamp duty holiday was part of the package of financial breaks introduced back in mid-2020 when the first lockdown started to ease. Beginning on 8 July, normal stamp duty was temporarily waived on the first £500,000 of a property purchase (though surcharges for second homes or buy-to-let properties still applied). This represented a huge saving for homebuyers, and was one of the factors that led to the unexpected boom in property purchases during the second half of 2020.
However, the stamp duty holiday is due to end on 31 March 2021, so time is getting very short to complete by the deadline. A new lockdown has led to renewed calls for an extension to the holiday, but this is unlikely to be top of the chancellor’s list. The property sector is in much better shape than many other industries, and has the rare privilege of being able to continue operating through lockdown where so many other businesses have had to shut up shop.
This means the pressure is really on to get those property purchases completed in time, and when people start rushing, they’re less likely to check things really thoroughly.
How can you protect yourself?
In short, it is worth being suspicious and a bit over-cautious – especially when it comes to transferring money. Verifying payment details by phone is a good idea. A decent solicitor will understand you giving them a quick call to check their bank details, especially when the sums are so large.
Certain things should ring alarm bells, including emails that arrive at odd hours, sudden changes of payment details, and emails written in bad English. Basic spelling and punctuation errors should make you very wary. The same goes for any emails where the person is trying to rush you into making the payment. Agents can occasionally be pushy in an effort to get the sale through quickly, but it’s good practice to resist this even if they’re genuine.
Good email security is also key. Any good law firm will take its cybersecurity very seriously, so the breach is more likely to be at your end. It sounds obvious, but in an era where we increasingly have to create accounts, usernames (often our email address) and passwords for half the websites we visit, password reuse is a very bad idea. Use a strong, unique password for your email account and update it periodically.
Are there other scams that homebuyers should be aware of?
Identity theft remains a problem when people move house, but you can protect yourself quite well against this by setting up a postal redirect until you’ve made sure everyone has your new address. There are also stories of another scam where ‘agents’ call people who’ve recently bought a house explaining that they are due some sort of refund, and use this as an opportunity to harvest important personal data. As above, a healthy degree of suspicion towards anyone unfamiliar who calls you out of the blue will serve you well.
Scams have always been around, but increasing numbers of fraudsters are moving their operations online – particularly since lockdowns and other COVID-related measures are reducing their opportunities elsewhere. The best you can do is remain reasonably cautious and regularly review your online security.