It’s not uncommon to own a second property these days, and, in 2005, Peter and Jean Charlton decided to let theirs out. The couple, in their early sixties, had paid off the mortgage on the three-bedroom house in Hertfordshire and were glad of the extra income.

The Charltons turned to their local estate agent to advertise for tenants.

A single, professional man was found, and he was due to move in that summer. He had been put through several reference checks, first with the estate agent, then through a referencing agency.

Yet, despite having paid a deposit and the first month’s rent in advance, the tenant never moved in. The Charltons (not their real name) were curious as to what had happened, but as they were not out of pocket, they didn’t worry too much. New tenants were found and the incident was forgotten.

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More than a year later, a letter arrived at the property by recorded delivery, addressed to the Charltons. When the tenants forwarded it to them, the couple discovered, to their horror, that it was a possession order. Rooftop Mortgages, which provides home loans, said it was taking the house because the mortgage payments were in arrears – odd, given that they didn’t have a mortgage.

The couple were the victims of a pernicious form of identity theft – but with a twist. The original “tenant”, who has yet to be traced, had taken out a mortgage on the property – on which he had then defaulted – using information on the Charltons taken from the Land Registry’s website.

The government body, responsible for maintaining a record of who owns all the land in England and Wales, went online in 2005. Since then, it has been possible, for a small fee, to download sensitive information about homeowners, including the size of their mortgage, how much is outstanding and any other loans that have been secured on the property, as well as account numbers and, crucially, signatures.

As the Charltons subsequently learnt, Rooftop Mortgages had made a £140,000 loan on their property at about the time they were first contacted by the phantom tenant. In the months that followed, it sent further letters – none of which appeared to have been forwarded to the Charltons.

After a year, when it had still not received any payments, the company obtained a court order to repossess the property.

Desmond Kilcoyne, a barrister who specialises in property law and a Sunday Times expert, says that such orders are usually a last resort. “The court will want to make sure the lender has made every effort to contact the homeowner,” he says. “But if they do not appear in court, and have not responded to letters from the mortgage company, the court will deem it to have every right to take possession of the property.”

For a mere £3, the fraudster had been able to glean a substantial amount of information from scanned documents available online at the Land Registry. He then forged the Charltons’ signatures to gain the power of attorney, which allowed him to transfer the property to a fake name. Using that name, he then applied for a mortgage on the property.

The Charltons are not alone in falling victim to this type of scam. In the three years since its website was launched, the Land Registry says it has received 55 complaints of information having been obtained from its website for fraudulent purposes. It has paid out more than £12m in compensation to date. In the Charltons’ case, it has admitted liability, and the £140,000 debt is to be paid off, although it has yet to return the property into their name.

When asked about the Charlton fiasco, Rooftop Mortgages replied: “We have robust procedures in place to protect customers from financial crime and we make every effort to stay at the forefront of best practice within the industry. If we are the victim of a fraudulent application, we act quickly to report it to the relevant authorities and will assist them in whatever way we can to redress the situation.”

In response to the Charltons’ predicament, and similar cases, the Land Registry last week removed scanned documents with signatures and mortgage details from its website. It says it has acted “in response to customer concerns about the potential misuse of scanned documents available electronically”.

The move represents an about-face for the body, which had resisted calls to remove the data from its site on the grounds that it had always been available. It said that by putting the information online, it had been acting in accordance with the Land Registration Act 2002 and the Freedom of Information Act 2000.

The Council of Mortgage Lenders (CML) has been calling since last year for the Land Registry to tighten the information on its website. “We were concerned that our customers would be exposed,” says Bernard Clarke, communications manager at the CML. “There was no need to post account numbers or signatures.”

The Charltons have enlisted the help of Peter Lilley, MP for Hitchin and Harpenden and former Conservative secretary of state for social security. He raised the subject in a Commons debate on Wednesday.

Identity theft of various kinds is estimated to have cost the British economy £2 billion last year, up from £1.7 billion in 2005. Police are investigating reports that up to £12m has been stolen by fraudsters using information taken from the Land Registry website. Seven people have been charged by West Midlands police in recent weeks over a suspected £1.3m mortgage fraud.

In the Charltons’ case, it appears they were the victims of organised crime. Similar scams have taken place in Cambridge and Southampton, and the proceeds are thought to have been taken out of the country to Pakistan.

Other instances came to light recently after an investigation by BBC Radio 4’s You and Yours programme, which reported one case of fraud to the tune of £8m. The Land Registry confirmed it had paid this out in compensation as part of the £12m figure. In both this and the Charltons’ case, there was no mortgage on the property, which, according to the CML, means a lender would be far less likely to ask questions than it would if a property already had a loan against it.

Mike Westcott-Rudd, head of corporate legal services for the Land Registry, says: “People can be confident that their property ownership is safeguarded by the state, because, if someone is a victim of fraud, we have a comprehensive scheme in place to put things right.”

He also pointed out that the agency’s income from online fees amounted to £870m. That isn’t the point, Lilley says. “This is not a money-making exercise – it is fraud.”

For the Charltons, the saga has been a nightmare from start to finish. Mrs Charlton says: “We just want the house back in our name.”

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