Where there’s money and success, there are scams.
And although more property investors than ever before are aware of the potential to be scammed, fraudsters are adapting all the time.
Here we’ll reveal what you should be looking out for so you can avoid becoming a victim.
We’ll also outline how you can recognise genuine sales and lettings agents…
Is property investment safe?
Property investment is one of the best pathways to financial and lifestyle freedom.
However, due to the money involved in property investment, it’s a sector that attracts its fair share of fraudsters and scammers.
But if you know what to look out for, and the qualifications and accreditations bone fide sales and lettings agents should have, you can avoid the fakes and embark on a successful career in property investment.
Types of property investment scams
There are a whole host of potential property investment scams you should be aware of – whether you’re an existing landlord or looking to invest in property for the first time.
Thanks to the growth of digital platforms, property scammers have access to potential victims more easily than ever – but many still use more traditional techniques, too.
1. Online property scams
You may not have ever heard of pharming and phishing – both of which look like rather major spelling mistakes.
But they’re not – they’re actually online techniques used by property scammers.
Pharming sees scammers redirect you to a fake website, which often impersonates a real company site.
By visiting the site, the scammers can either upload malicious software to your computer or phone, or they can steal personal information.
Phishing, meanwhile, is when fraudsters send hundreds of emails, which can trick you into providing personal details or signing up for something that doesn’t exist – like a fake property scheme.
2. Telephone scams
Also known as vishing, telephone scams are still a major technique used by property fraudsters.
The caller may pretend to be from your letting agency, or another business you use to rent out a property, and they’ll often use tricks to get you to hand over your bank details or other personal information.
3. Buy-to-let property scams
Good property investors are always looking for ways to boost their portfolios and scammers can take advantage of this by promoting fake, or unusual property investment schemes.
Property schemes abroad are still extremely common scams, where investors are tricked into paying large amounts of money up-front for developments that either don’t exist or have little chance of getting off the ground.
4. Identity or company theft
This kind of property scam is becoming more and more common, particularly through fake or ‘cloned’ sales and lettings agencies.
Scammers attempt to ‘clone’ leading sales and lettings agent businesses and their websites, luring tenants into paying deposits and up-front rent on properties that duplicated from the real agent’s website.
How do you avoid property scams?
The best approach to avoiding many property scams is to assume that if it sounds too good to be true, it probably is.
But as property scams can vary in their approach, there are many other steps you should take to avoid falling victim to fraudsters:
1. Dispose of paperwork safely
One of the oldest scammer tricks in the book is getting hold of personal details through paperwork that has been thrown away in rubbish.
If you’re disposing of any documentation, shred it before you put it in your recycling bin.
2. Question every email you receive
Property scammers have become very adept at impersonating legitimate sales and lettings agents over email.
But there will always be tell-tell signs that it’s a scam:
Check the sender’s email address
Scam emails usually have strange addresses, even though the sender’s name may appear legitimate.
Hover or right-click over the sender’s name to reveal the email address behind it.
Check the contact information at the bottom of the email
Genuine companies use Customer Relationship Management (CRM) systems to send out emails to their databases.
These will often include clickable links at the bottom of the email.
Hover over those links (but don’t click them) to see where they lead. If the link looks suspicious, it’s probably a scam.
Genuine emails from bone fide property companies will have high-quality and consistent branded logos and colours.
Scammers are often unable to replicate this branding, so keep an eye out for poor quality logos and colours that don’t match the real company’s logos and colours on their genuine website or email communication.
3. Never give any details over the phone
No genuine sales or letting agent, or other property company, should call you out of the blue and ask for personal information like bank details.
All legitimate companies have privacy policies that outline how they’ll contact you and how they’ll use your data, and these can be accessed through their email communications or website.
4. Look out for quotes and figures that seem too good to be true
If a property scheme or development is offering returns that seem too good to be true, you should be wary.
Scammers will often use slick marketing techniques promising incredible returns or profits to lure people in.
Start by assuming anything like this is a scam until you’re able to prove otherwise.
5. Don’t be rushed
Fraudsters are only one suspicious person away from being caught – and they know this.
So, they’ll often try to rush you into committing to the property deal or scheme they’re supposedly marketing.
Look out for overly persuasive phrases like ‘Act Now!’ in emails or on websites.
Property always involves large sums of money, so you should never feel rushed – and if you do, it could be a scam.
How to verify a sales and lettings agent
All professional sales and lettings agents should have an industry body accreditation.
Every agent must, by law, be a member of one of two government-approved redress schemes:
• The Property Ombudsman
• The Property Redress Scheme
So, if you’re approached by an ‘agent’ who can’t prove they’ve joined either scheme, you should be wary.
For further verification on an agent’s credibility, you should check Companies House to establish they have a trading history.
For letting agents, meanwhile, they must, by law, publish their Client Money Protection certificate on their website, as well as a comprehensive schedule of fees and charges.