The growing threat of rental fraud

To support their application, you’re going to credit check prospective tenants and ask them for documents to prove their right to rent in the UK, prior residency, employment history and payslips, income from bank statements, and references from previous landlords. However, it’s pretty easy these days for anyone to amend a PDF to create ‘fake news’. They can change their name, adjust the income shown, or lie about their credit score, and it’s hard for the human eye to spot. Advanced fraudsters go beyond this by using software and other tools to create fake websites, conceal active CCJs against them, and hide their real financial and residential history. There are even websites where people can buy a fake credit file to pass on to you.

Let’s say an applicant has gone through your screening process. At this stage, fraudsters might offer to pay you by wire transfer. They send you a cheque which is more than you asked for, then ask you to return the money before the cheque bounces. This leaves you without both the initial payment and the money you returned.

Sadly, penalties are not a sufficient deterrent. Scammers who get caught face losing their holding deposit – but that doesn’t stop them from making further fraudulent applications.

Imagine you’ve accidentally accepted a dodgy tenant. They will deliberately run up huge arrears while making convincing promises to pay. Typically, they will refuse to move out until you evict them – and that’s not as easy as it used to be.

Another scam is where a tenant will deliberately damage your property so they can raise a complaint against you and avoid paying the rent.

In another scenario, you might find your existing tenants are illegally subletting. They might invite a family member to stay or bring in co-tenants to help them cover their costs. However, those co-tenants might have a poor credit score or even a criminal history – not the type of people you thought you were letting to at all.

Another approach is for a fraudster to download all the lovely images and descriptions you created for your property and then relist it on another letting site such as OpenRent or Gumtree. In this case, they’ll quote an increased rent and pocket the difference. Or they might let it to someone else, and when you go to collect rent arrears, you turn up to find complete strangers in your property. Or they might collect an upfront payment from an unsuspecting third party which goes directly to them, while the poor victim pays the fraudster but never gets the keys.

Sad to say, but some people commit multiple frauds with multiple agencies. Presumably, it must be worth their while. But you don’t want to be among their victims. Fortunately, there are actions you can take to protect yourself.

Tenant-referencing is already a legal requirement. Always take up references and check them thoroughly. Screen application documents to ensure they have not been falsified as well as meet tenants in person so you can make your own judgement.

Luckily, in an attempt to stay one step ahead of the fraudsters, technology is always advancing. Look for specialist companies and software to help. Harness it to do your due diligence for you, and you can enjoy peace of mind knowing your tenants are genuine and respectful so your rental income is secure.

Make sure your rental agreement includes a clause that forbids your tenants from sub-letting to a third party. Also, ensure that co-tenants get named and verified on your tenancy agreements. If not, the agreement can be terminated.

It’s a great quality to be trusting, to assume your new tenant is nice and a good person. But you should always wait for their money to clear in your bank account before you can assume it’s been paid. So, you need to be a bit suspicious too.

With Section 21 disappearing as part of the Renters (Reform) Bill, you may have less power to get rid of tenants, but you do still have the right to evict them when they’ve been fraudulent. However, ‘no-fault’ evictions are changing whereby the tenant is at fault for not paying or by breaking the terms of the agreement. In this case, a landlord can evict them.