Property developers offering cash and other perks in an attempt to attract homebuyers will have to give mortgage lenders full details of their “give-away” deals as part of an antifraud initiative launched yesterday.

It follows a sharp increase in organised mortgage fraud over the past year as house prices have slid by an estimated 10.5 per cent and the credit crunch has dried up traditional sources of credit. One of the tactics used by fraudsters is to overinflate the value of the property that they are buying to obtain more finance than a home is worth. Developers’ incentives can distort the value of a property.

Bradford & Bingley, the struggling mortgage bank, admitted last week that it had taken an £18 million charge to cover losses as a result of organised mortgage frauds uncovered during the first half of the year.

The antifraud initiative was first reported by The Times and is backed by the Council of Mortgage Lenders (CML) and the Royal Institution of Chartered Surveyors (RICS).

It comes as property developers, faced with an oversupply of new homes, offer a range of incentives, from the payment of stamp duty to free cars, in an increasingly desperate attempt to shift houses.

Michael Coogan, director-general of the CML, said: “These measures to reinforce confidence in the accuracy of valuations of new-build properties will help to underpin this segment of the market.”

The new measures, which took effect yesterday, mean that builders or developers of any newly built, converted or renovated property will have to fill in a disclosure of incentives form, which is passed to lenders.

The form poses 12 questions, one of which asks whether any third party has a financial interest in the deal.

A spokesman for RICS said that an increase in artificially high valuations meant that buyers, particularly in newly built city centre developments, had found themselves in negative equity immediately after completion.

Experts say that a general failure to disclose incentives has made it easier for organised crime rings to buy up strings of properties and defraud mortgage companies. It is thought that high street lenders are sitting on losses worth hundreds of millions of pounds from loans secured by criminal means. It has been estimated that as much as £7 billion of mortgages have been fraudulently obtained by organised gangs as well as individuals.

Conveyancers involved in sales of new homes will also be required to ensure that incentives are disclosed.

— UK households are running up increasing levels of bad debt, according to Capital Economics. The figure rose between April and June for the second quarter in a row, taking the average bad debt per household to levels not seen since 2000.

Are builders' freebies worth it?