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I Bought, And The Land Registry Figures Were Fiddled. Do Not Trust Them.

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Just completed on a new build. Yes, I am mad etc. But I got a good deal. 50% off.

But here is the strange thing. Lots of the paperwork showed the asking price, although what I paid was £70k less. This was put on the paperwork as a 'gift' from the builder. I asked what would show on land registry figures, and they confirmed it would be the higher price.

here is the scary thing - LR figures are used by governments to make policy decisions. The BoE uses them to make interest rate decisions. But they are 30% off!

Why do you think the builder would have done this?

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Guest theboltonfury
Just completed on a new build. Yes, I am mad etc. But I got a good deal. 50% off.

But here is the strange thing. Lots of the paperwork showed the asking price, although what I paid was £70k less. This was put on the paperwork as a 'gift' from the builder. I asked what would show on land registry figures, and they confirmed it would be the higher price.

here is the scary thing - LR figures are used by governments to make policy decisions. The BoE uses them to make interest rate decisions. But they are 30% off!

Why do you think the builder would have done this?

50% a new build - really?? How come?

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Guest happy?
Just completed on a new build. Yes, I am mad etc. But I got a good deal. 50% off.

But here is the strange thing. Lots of the paperwork showed the asking price, although what I paid was £70k less. This was put on the paperwork as a 'gift' from the builder. I asked what would show on land registry figures, and they confirmed it would be the higher price.

here is the scary thing - LR figures are used by governments to make policy decisions. The BoE uses them to make interest rate decisions. But they are 30% off!

Why do you think the builder would have done this?

My poor brain can't get around your numbers. You say you got a 50% discount and you paid £70k less. Then you say the Land Registry figures are 30% off.

Are you saying you the property was registered as sold for £140k and you got a 50% discount on this i.e. £70k - if so where does the 30% figure come into the equation?

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Just completed on a new build. Yes, I am mad etc. But I got a good deal. 50% off.

But here is the strange thing. Lots of the paperwork showed the asking price, although what I paid was £70k less. This was put on the paperwork as a 'gift' from the builder. I asked what would show on land registry figures, and they confirmed it would be the higher price.

here is the scary thing - LR figures are used by governments to make policy decisions. The BoE uses them to make interest rate decisions. But they are 30% off!

Why do you think the builder would have done this?

Does that smell of loss-leader? An attempt to set a price on other units in the development.

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Just completed on a new build. Yes, I am mad etc. But I got a good deal. 50% off.

But here is the strange thing. Lots of the paperwork showed the asking price, although what I paid was £70k less. This was put on the paperwork as a 'gift' from the builder. I asked what would show on land registry figures, and they confirmed it would be the higher price.

here is the scary thing - LR figures are used by governments to make policy decisions. The BoE uses them to make interest rate decisions. But they are 30% off!

Why do you think the builder would have done this?

Yes this does not suprise me, the builders are just trying to lure other mugs to buy their over priced c**p for a higher price than somebody with some balls.

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Guest theboltonfury
Does that smell of loss-leader? An attempt to set a price on other units in the development.

that actually makes sense

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But the higher, inaccurate figure goes on the Land Registry record, does it not?

Thus creating a false market for the future, given that buyers, vendors, EA's, lenders etc all rely on the accuracy of LR figures?

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My poor brain can't get around your numbers. You say you got a 50% discount and you paid £70k less. Then you say the Land Registry figures are 30% off.

Are you saying you the property was registered as sold for £140k and you got a 50% discount on this i.e. £70k - if so where does the 30% figure come into the equation?

I assume that he got a 50% off the asking price - but paid 70k less than the reported figure, which is 30% less.

assuming initial asking price = Y

what he paid Y / 2

what they reported Y / 2 + 70k (approximately)

Assuming 30%= 70k then he paid, and Y / 2 = 100%, then I guess he could have paid around 160k for something valued above 320k and they reported it as 240k or (figures approx, but you get the idea)

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I noticed something similar on new-builds in Surrey in 2006 /2007.

We viewed 2 different properties in two developments. The building company offered to pay a deposit, legal fees etc giving a discount. We didn't buy.

When I checked the land registry both flats were registered at the higher price. Totally distorting the figures and giving a false impression of what things were selling for.

Someone from HPC did contact the Landregistry and post at the time. They said that they weren't interested and could not suggest anyone to report this to. Can't remember what happened next.

Edited by Flopsy

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I noticed something similar on new-builds in Surrey in 2006 /2007.

We viewed 2 different properties in two developments. The building company offered to pay a deposit, legal fees etc giving a discount. We didn't buy.

When I checked the land registry both flats were registered at the higher price. Totally distorting the figures and giving a false impression of what things were selling for.

Someone from HPC did contact the Landregistry and post at the time. They said that they weren't interested and could not suggest anyone to report this to. Can't remember what happened next.

OK whilst this is totally cr*p and blatant fraud it will actually bite them in the b*lls in the future. Sales figures only make it into the land registry house price index once the house has been sold twice.

So if I sell some mug a newbuild for £500k this year but he only pays £100k, according to this anecdote the land registry will happily take down the daft £500k figure in their records.

When the guy who bought for £100k comes to sell in two years time (assume the market has stagnated during that time), he will quite happily sell for £100k to someone else. The land registry then record this figure and in their house price index they record that the house has fallen in value by 80.0%.

Whoops they've just made the house price crash last even longer.

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It is your solicitor's responsibility to ensure the price you paid (not the higher price) is what's on the paperwork, I believe.

This was one of the fraudulent activities that developers were (are still?) using to artificially inflate the prices so others pay more/higher.

Investigate taking this further to check.

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You conveyancing solicitor is responsible for registering the sale with all the correct details with the land registry as opposed to the developer/seller.

This is one of the standard things you will pay your solicitor to do.

If the solicitor doesn't follow good practice in registering the correct price with the land registry after any incentives is a case for the Solicitors Regulation Authority.

Did you get 50% off the 'real' price?

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Guest sillybear2
It is your solicitor's responsibility to ensure the price you paid (not the higher price) is what's on the paperwork, I believe.

I bet they direct you to a solicitor of their chosing, it may even be conditional on the sale/discount.

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Here's how it works:

Developer builds property worth (say) 100k

Offers it for sale for 110k with 'cashback'

Dodgy or naive valuer values property @110k

Buyer gets 110k mortgage

Dodgy or naive solicitor arranges sale

Buyer pays 110k for property

Seller gives buyer 10k cashback

Propery is notionally worth 100k and buyer has effectively paid 100k

Now consider this:

Property is notionally worth 100k ; buyer has instant negative equity of 10k with 100k mortgage

Property is new and thus offers little scope for £10k of improvements that would add value to property

Buyer has 10k burning hole in pocket so p***es it away on plasma TV, waterbed, etc., instead.

Prices fall due to HPC

Buyer wants to sell, but developer is now offering properties for £110k with 30k cashback on other properties in development, effectively 80k

Buyer is stuck with 80k property with 30k negative equity, while other sales prices continue to be falsely recorded as 110k at Land Registry

Plod knocks on developers door and invites him for a cosy chat.

Word gets round that properties were not ever worth 110k after all.

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Heard it before on HPC, its a BMV (below market value) deal and it works out that everyone is happy, so no-one complains. The only person who could complain is the buyer, but they committed the fraud so they wont, and because gov is happen nothing will happen anyway.

benefits:

Developer gets a sale

It looks like properties are selling at the full price market price to future buyers

Government gets a larger amount of stamp duty

Buyer gets a cheaper price

(In the past buyers could MEW instantly to buy a BTL flat)

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Guest sillybear2
Plod knocks on developers door and invites him for a cosy chat.

In the real world everyone can see what's going in, ERIC writes to the SFO and they say they're not interested.

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Thanks - good anecdotal. Not exactly shocking news though - thought this had come up a few times before?

I think the thing to remember is LR (or any other figures) have NEVER been 100% accurate. They've clearly been affected by a number of issues in recent years (Prices subject to developer incentives, classification of auctioned properties etc; incomes subject to liar loans and 'fudged' definitions). As might be expected, during the boom the inclination was to over-report both prices and incomes.

So the figures aren't 100%. When I hear that average price is £xxx,xxx, I don't believe it. But the killer question is always - are the figures accurate enough for how you want to use them?

'Accurate enough' wouldn't be acceptable on a company balance sheet when deciding on buying shares, and it's not good enough in the LR when deciding how much to pay for a house.

The way LR figures have been (and are) manipulated is fraud, pure and simple. The fact that the LR confirmed it excludes 'below market value' sales (i.e. repos/auctions as discussed here recently following a report in the Guardian) means they are complicit.

Basically, you can't rely on the LR to inform your property-purchase decisions ... which begs the question of what exactly it's for?

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are the figures accurate enough for how you want to use them?

I have been looking at a road I used to live in; The prices recorded (including the sale of my own house 10 years back) maps very closely on onto the HPI - adjusted figures. I am taking a road with about 20 nearly identical properties, making the market value easy to determine.

I am using this to gauge true market value of similar properties, using the LR's HPI. PRICE/HPI is nearly constant over 12 years, as one would expect,

The Land Registry is open to distortion (such as inheritors underestimating true value to avoid Inheritance tax) but it generally records the true prices paid. Beware figures for shared ownership (Housing Association) properties.

Other Indices, such as Woolwich, ignore non-mortgage transactions and are distorted by their cleintele demographic.

Worse still are stupid VI and EA indices that use ASKING price as the measure.

The Land Registry is the best measure and Fubra gives you access to the raw data on the Land Registry, property-by-property.

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Fair point. But realistically, how much will below market value trans and developer incentives affect the overall

average price? (New builds and auctions both comparitively low volumes).

The problem is that the whiff of impropriety makes people doubt the figures altogether.

Perhaps what we need is an estimate of how far out they truly are. I don't know but I'd guess +5% maximum for purchase prices (although LR income figures are vastly over-reported).

Well at least this is consistent with many other aspects of the current economic crisis, in that it's about the obfuscation of price data ... there are all kinds of data sets where it would be helpful if we knew how far away from reality they were ;)

The problem with the LR making the excuse of 'not many auctions' is that that might change in future (I would guess that auctions as a percentage of total sales is already rising). And if they then redefine how the registry is done, they get a nasty discontinuity where before/after can't be directly compared because the methodology changed (and I would think that the value of the index to future social/economic historians will also be compromised by such things).

So the only way to credibly make such an index is to be scrupulously honest from day 1 ... and to chase and prosecute solicitors/clients who conspire to enter false data.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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