With this in mind, our researcher called a branch of a large property development company in Northumberland pretending to be a well-off parent looking for a property for his student daughter.

The Help to Buy scheme was used as a sales tool by the developer. Here’s a summary of the phone call:

Creative prospective purchaser:”I’m looking to buy a property for my daughter whilst she is at University. I’ve heard about the Help to Buy scheme.”

Developer sales person: “Yes sir, we have some lovely new properties at £164,950 which would be perfect for you.”

Creative prospective purchaser: “I’d like to buy the property whilst my daughter is at college, rent out the other rooms and then sell it when she leaves college.”

Developer sales person: “Yes, the Help to Buy Scheme is perhaps the best government scheme we’ve had. It’s fantastic. As long as the paperwork is in your daughter’s name it will be fine.”

Creative prospective purchaser: “So, I can buy the property, get a 20% interest free loan, rent out as a student house and if the students trash the place and I sell it after three years at a loss the government shares that loss, as long as it is all in my daughter’s name that’s fine?”

Developer sales person: “Yes.”

So, what is the incentive for the developer to stop this happening? Yes, it’s fraudulent for a ‘parent’ to buy for the child and rent out student rooms using this government scheme, but house developers have had a pretty tough time of it recently, so it’s understandable why they would want to collude in this fashion.

Should the regulators be doing more to combat this fraud? Absolutely. It reminds me of the 1980s when people were raising money to buy cars and holidays but were dressing up loan applications as applying for funds for a new conservatory.

Mortgage fraud is a two-way process. Stronger measures than that are needed if indeed the Help to Buy scheme is needed at all.

Mark Blackwell is managing director of online property data network xit2