The Land Registry is facing a compensation bill up by £5 million on last year because of an increase in fraudulent title registrations.

Figures in its annual report, published in August, show the value of claims pending for losses resulting from errors on the register caused by fraud and forgery has increased from £2,807,000 in 2007 to £7,502,000 in 2008. The sum has risen year-on-year for the past five years.

A Registry spokeswoman said the figures were estimates of potential liability and needed to be put in context – of the £483m fee income received in 2007/08, £9m was paid out in compensation for indemnity claims and of that figure, £3.9m was for fraud or forgery.

She said the Land Registry took fraud seriously, but had to strike a balance between making the system accessible by simplifying the process of conveyancing and ensuring that appropriate safeguards were written in.

‘Practitioners will be involved at some stage in the overwhelming majority of frauds and part of our security depends on them carrying out money laundering and other "know-your-client" checks,’ she added.

Commenting on the figures Paul Marsh, Law Society President, said: ‘It’s a worrying trend and the Law Society has expressed concern about the processing of title registration in the absence of land certificates… The system puts the onus on solicitors to carry out identity checks and if the profession didn’t do its job as well as it does, the figures would be far worse.’

The report also reveals the Land Registry has written off £15m spent developing the chain matrix – an online system designed to track the process of conveyancing transactions – that it has now put on hold.

The Registry spokeswoman said that sum represented the cost of developing its e-conveyancing strategy, to which it remained committed, and only £4.6m had gone on the chain matrix prototype.

Meanwhile, the Land Registry has dropped controversial plans requiring conveyancers to confirm that they have verified the identity of any disponee and disponor of land.

It had planned to alter forms AP1 (application to change the register) and FR1 (application for first registration) to include such confirmations, but nearly 60% of respondents to its consultation on amending the Land Registration Rules 2003 opposed the move.