Tenancy fraud is a challenge you’ll hope that you never encounter as a landlord but thanks in part to the cost of living crisis it’s a growing trend, with the number of fraudulent tenancy applications rising by 140% last year alone.
It has a costly impact on landlords like you, resulting in loss of income, rental vacancies and possible eviction battles. This can be even more disastrous if you are relying on your tenant’s rent to pay the property’s mortgage costs.
Beating tenancy fraudsters relies on being hyper-alert to their tactics and putting in place preventative measures to reduce risk.
How the fraudsters are working
Pay slip fraud accounts for more than half of all fraud cases, with perpetrators boosting their income or editing income sources, such as changing a company name. Fraudsters are also providing false passport images, doctoring bank statements and offering fake references.
Fraudulent tenants may be looking to disguise their identity or to hide a bad tenancy or a poor credit record. Or they may be overstating their income to get a larger property that they can’t afford, which puts them at risk of falling into arrears.
Looking for red flags
Being aware of the red flags of tenancy fraud is important to enable its detection before you are faced with this sort of situation. Is a prospective tenant looking to move quickly, offering big advances in rent for little reason, making excuses when asked to provide information for your checks or being evasive about meeting in person? These are all signs that something might be amiss.
Be aware that this isn’t just about tenants overstating details to pass affordability checks. It could also be a case of more targeted and sinister fraudulent activity, such as someone looking to sublet to make additional cash or planning to use your property as a base for criminal activity. Being vigilant about the risks that you face is vital.
Undertake document checks
You can ask for several details from prospective tenants to help prove that they will be trustworthy tenants. These include proving they have the right to rent. You can do this by checking their documents or carrying out an online right to rent check. You should then take copies of such documents and keep them until the tenant leaves the property.
Consider tenant referencing
By undertaking more thorough tenant referencing checks you are more likely to catch potential fraudsters. Such referencing checks can reveal wider rental history and financial status, as well as any criminal convictions. Using a referencing specialist can help to prevent fraud since their checks are more extensive than those you can do yourself.
Such companies not only have more experience but also tend to have access to fraud databases that can help pick up anomalies that fraudsters might be trying to hide. They also use advanced technologies such as AI that can help identify sophisticated image and document manipulation.
Being thorough and vigilant when it comes to tenancy fraud prevention will help to safeguard your property and your rental income, allowing you to beat the tenancy fraudsters.
For expert guidance on letting in 2024, contact one of our Kings Group branches in Essex, London, or Hertfordshire. Plus, get a free online valuation to gauge your home's current worth.
