The buy-to-let market is vulnerable to large scale mortgage fraud, according to an industry expert.
Stephen Gilchrist, head of regulatory law at Saunders Law, said that the mortgage fraud process for buy-to-let properties usually occurred in a variety of ways.
Examples of property fraud include nominating fictitious purchasers and borrowers, inflating the property value deliberately then seeking to borrow the full inflated valuation, followed by late or unpaid mortgage payments with the property allowed to fall into a state of disrepair.
After fraud has taken place, properties are often used for further criminal activities including drug production, unlicensed gambling and prostitution.
When the bank or lender seeks payment of the mortgage, the swindlers often use more fake purchasers to raise another mortgage with a different institution, again at an inflated valuation.
When the second mortgage is taken out at an inflated level this allows the first mortgage to be paid off, then repeated.
Later, Gilchrist warned, when the bank forecloses on the property, it will find it in disrepair and worth significantly less than the arrears owed.
Gilchrist said: "The buy-to-let market is particularly vulnerable to mortgage fraud, whether through new-build apartment complexes or large scale renovation projects. Occasionally commercial properties will be involved."