Fraudulent applications on the increase in the lettings sector
Fraudulent applications in the lettings sector are on the increase, according to a claims reference service.
The tenant reference provider Homeppl has claimed that fraudulent applications have risen sharply in the last two years as the cost of living crisis has seen rents on the increase, whilst tenants incomes have fallen in real terms. The provider says that over 90% of the fraud that it flags up in rental applications is due to applicants trying to conceal their true affordability by changing original financial documents or creating completely false ones.
In a survey of property management companies by Entrata, 55% of respondents said that they experienced fraudulent lease application attempts every few months, with 15% saying they have multiple attempts each month. Worryingly, over 30% of respondents were said to be “very concerned” about fraud, and over 60% admitted that they were not confident in their existing fraud prevention measures.
It should be a concern for landlords, as when taking into account legal fees, eviction costs, and damages, it's estimated that it now costs an average of £44,000 to evict a fraudulent tenant in the UK.
Lease application fraud tends to fall into one of two categories:
- Falsification of documents intended to improve the prospective tenant’s perceived ability to pay rent
- Deletion and/or ommission of evidence of past mismanagement of the applicant's finances
Attempts to improve the perceived ability to pay rent generally take the form of amended employment records, pay slips, bank statements and other documents that create a more favourable impression of the applicant’s cashflow and assets available to pay rent. It has become much easier to commit this kind of fraud, as documents can be scanned and edited on most home computers, making it much more tempting to take a chance on this kind of fraud.
Hiding evidence of past financial mismanagement is a common form of identity fraud, with those applicants with an incomplete or negative financial history being inclined to manipulate their identities in the hope of hiding their poor financial reputation.
Homeppl's chief executive Alexander Siedes said “We’re in the middle of an economic crisis where demand for rent is high, the cost of renting is high, the cost of food, gas and heating is high and because of that, we have seen people falsify their rental applications to secure property in a difficult market.”
With all types of applicant fraud on the rise, landlords should ensure that they engage a reputable lettings agent to ensure that they source genuine, good quality tenants. Whilst some of the activities identified may be enough to fool some referencing companies, a reputable lettings agent will use credit reporting agencies and other consumer data aggregators that are extremely good at returning complete and accurate information.
Need some help sourcing good quality, trustworthy tenants for your rental property? Contact us online or call 0161 511 5339 to speak to one of our lettings specialists about our range of lettings management services, including our exclusive, VIP ONE Management service that makes renting your property a breeze.
