Rental property scams - how to avoid them

Last updated: 12/09/2017
3 min read

It’s a sad fact of life that scammers, fraudsters and con artists seek to deprive people of their hard-earned money – and, unfortunately, the world of lettings doesn’t escape such practices.

With an increasing trend of unlawful activities surrounding rental homes, especially online, we list the most common rental scams and how you can do your best to avoid them.

The elaborate scam of the fake landlord

Sadly, some prospective tenants lose thousands of pounds to hoax landlords and properties.

Fake properties are often listed on Gumtree, SpareRoom or other similar websites, particularly in areas with high demand for rental homes. Prospective tenants are then convinced to transfer a deposit or an advance rental payment – anything from £500 to £1,600 – to ‘hold the property’.

In some cases, tenants even visit the property in person and are shown around by someone claiming to be the landlord before being asked to transfer a holding deposit.

A few weeks later, with no further contact being made, the tenants realise they have been the victim of a scam.

As well as fake listings and scammers advertising properties that are already rented out, the most common cases of rental fraud concern ‘phantom flats’ – cheap properties advertised in prime locations that either don’t exist or are owned by someone else.

Property rental sites such as Rightmove are also used by fraudsters to convince tenants to hand over money – straight into the bank account of the ‘landlord’ – before a viewing, again working on the proviso that the home will be ‘secured’. Concerns about high demand, the need to act decisively and fierce competition for rental homes are preyed on by the perpetrators.

A growing problem

In 2015, the number of reports of rental fraud in the UK rose by approximately a third on the previous year, with Action Fraud, the national fraud reporting centre, recording 2,940 incidents.

In the first nine months of 2016, some 1,891 people said they had been the victim of rental fraud. The Telegraph also reports that 3,200 house hunters contacted the police regarding rental fraud in 2015, up by 44% on the previous year.

The Local Government Association, however, believes this is only the tip of the iceberg – claiming that just 5% of victims choose to come forward and report the issue. Many choose not to do so because of embarrassment or fear they won’t be believed.

It’s estimated that fake landlords are generating around £775 million annually from rental fraud, with victims losing out around £2,400 on average.

Free online platforms, such as Gumtree, which only require users to provide email addresses and phone numbers, make it easy for criminals to advertise phantom properties.

Would-be tenants can also receive highly authentic-looking verification documents through Rightmove instructing them to pay one month’s rent and a security deposit of £1,200 direct through the portal.

Is it a rental scam?

Trust your gut instinct. If it sounds too good to be true, it probably is. Have a healthy dose of scepticism about everything – if a landlord is asking for a deposit to be transferred before you have even seen the property, alarm bells should start ringing.

Equally, Rightmove or other similar sites will never ask you to directly transfer money to them. If you receive a tenant verification request document from Rightmove asking you to transfer money to Rightmove PLC, assume something is up.

Other red flags could include the landlord seeming too keen or being asked for a security deposit or upfront fees that seem too high.

How can you protect yourself against scams?

Fortunately, there are several steps you can take to ensure you’re not a victim of a rental scam:

Never send money upfront before you’ve viewed a property. Transferring funds to secure a room is not standard and any landlord asking for a holding deposit may not have the best of intentions.
Avoid listings that have no photographs.
Visit the rental property in person and check the landlord’s ID. You should also check the veracity of any safety certificates (in particular for gas and electric).
If you’re asked to wire money via a service such as Western Union, be suspicious.
Check that the property actually exists.
Never pay for a deposit in cash. Use a credit card if you can – this offers more protection.
Use the Land Registry to check if the landlord is the legal owner of the property.
Check if the landlord is a member of a nationally recognised body, for example, the National Landlords Association or the Residential Landlords Association.