Lucy Barnard
The RICS this week said that it would be raising the matter of inaccurate new-build valuations with the Council of Mortgage Lenders at its next meeting, after details of an alleged £3m-£4m mortgage fraud emerged.
The move comes after it was revealed that 11 men have been arrested during the past 10 months after an investigation into suspected “large-scale mortgage fraud”.
The alleged fraud took place on the purchase of 84 offplan flats by a firm called Atrex in Persimmon’s The Pinnacles scheme in Thamesmead, south London.
A police spokesman said: “The investigation has established that between May and November last year, a company bought offplan new-build flats in Thamesmead. The company then resold the flats at greatly inflated prices, using mortgage brokers and chartered accountants to provide inaccurate mortgage applications for genuine buyers.
“In most cases, the buyers would not otherwise have qualified for a mortgage. The alleged fraud came to light following reports from banks and building societies when the properties either came to be sold or repossessed, when the true property value was realised by the lender.”
On 13 October last year, three men were arrested in London and Kent for money-laundering offences in connection with the alleged fraud. The first man was found in possession of €152,000 (£103,000) in his briefcase, a second with £100,000 in a carrier bag, and a third was found with £55,000 in cash.
There are no indications that any chartered surveyors have been accused of wrong-doing.
Jeremy Leaf, the RICS housing spokesman, said the institution was unable to investigate chartered surveyors unless it received a specific complaint against them, but that it would be raising the matter in its next meeting with the CML.
He said: “The lenders are just as concerned about this as we are. The market is changing and at such times valuations are more vulnerable.”
Lenders Alliance & Leicester, GMAC, Britannia, and Bear Stearns are thought to have lent on the properties.
A leading housing analyst said: “The new-build flats market may have been partially supported by suspect practices and, in particular, inflated valuations. There could be lots of ‘mini-Floridas’ in places such as Leeds, Leicester and Liverpool.”
Persimmon, which sold 40% of the block to Atrex, said: “It is not our policy to discriminate against any purchasers. We meet our legal requirements but are always reviewing our procedures to ensure they are as effective as possible.”
