Tenancy fraud is costing landlords an estimated £266m a month with 70% of landlord victims unable to retrieve their losses.
And research shows that one in 20 landlords have been a victim of tenancy fraud.
The most common types of tenancy fraud
The survey by LegalforLandlords shows most common form of tenancy fraud is defaulting on rent.
That is, moving into a property with the intention of living rent-free for as long as possible.
Once the fraud is detected, it essentially becomes a waiting game as the landlord fights to get the fraudster tenant evicted.
Meanwhile 20% of landlord respondents state that they have been victims of illegal sublets.
Some 8% of landlords report having fallen victim to fake financial information.
For example, prospective tenants create false employment or financial documents in order to fool landlords into believing they can reasonably afford to pay the monthly rent.
Other common rental scams include ID fraud – in which prospective tenants use fake identities, credit reports, or documents such as bank statements in order to rent a property under a false identity – and money wire transfer scams.
A typical money wire transfer scam will see the tenant issue a cheque for a larger amount than has been requested, and then ask for the money to be sent back just in time for the original cheque to bounce.
Tenancy fraud red flags
Common red flags of a fraudster tenant include having a limited or questionable online footprint, suspicious or strange references or referees, and attempts to hide or disguise background checks.
Landlords and agents should also be alert to the presence of any Politically Exposed Persons (PEPs) or any individuals who might be under sanction, either personally or as a result of their nationality.
Sim Sekhon, chief executive of LegalforLandlords, says: “Tenancy fraud is a growing and increasingly complex issue across the private rental sector, and these figures highlight just how significant the financial impact has become for landlords.
“While many scams are becoming more sophisticated, a large proportion can still be prevented through thorough, fastidious checks and robust legal processes at the very start of a tenancy.
“The reality is that tenant fraud is now as much a technology challenge as it is a procedural one.
“Traditional document-based referencing – such as payslips or bank statements – is becoming less reliable, as AI tools can now generate highly convincing fraudulent documents in a matter of minutes.”
This article is taken from Landlord Today