Chelsea Building Society has become the latest lender to be hit by mortgage fraud, taking a £41m charge, which pushed it into a first-half loss of £26m.

The Chelsea said it had uncovered fraud on hundreds of buy-to-let mortgages dating from 2006 to 2008. Many of the loans were on new-build homes in northern cities such as Manchester and Leeds. Typically, the frauds involved third-party surveyors, solicitors and other intermediaries artificially inflating the value of the properties.

The admission by Chelsea, the UK’s fifth largest building society, comes just days after Bradford and Bingley (B&B), the nationalised buy-to-let lender, said it had set aside an extra £100m for potential losses from mortgage fraud. Since the start of last year, B&B has set aside £270.8m relating to losses from “hundreds of cases” of potentially fraudulent mortgage applications or professional negligence on property valuations.