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TODAY'S OTHER NEWS

Fake rental applications on the rise as fraudsters up their game

The number of fake or fraudulent rental applications is on the rise, with landlords and letting agents being fooled by a range of tricks.

According to data from referencing firm LetRef, the number of fraudulent applications, using either fake bank statements and fake or cloned employers in order to pass referencing checks, has increased to an average of 13 cases per month in 2019.

This is up from an average of six fraudulent applications per month in 2018, equivalent to a rise of 117%.

With the recent introduction of the Tenant Fees Act, which bans agents from charging tenants for references, it is expected the number of fake applications will increase as tenants know they won't have to pay if they fail a referencing check.

LetRef reports that in June, when the Act was introduced, the number of fraudulent cases increased further to 16.

Meanwhile, London letting agency Benham and Reeves - which commission the research - says that the number of fake passports being used by fraudsters is also rising.

The agency says that it experienced a total of five cases of fake passports in 2018. However, in the first five months of this year, it had already dealt with 11 cases.

It says this is down to expert forgers knowing the code formatting required to pass an anti-money laundering check.

“This surge in fake applications demonstrates the importance of using a bonafide referencing company, where staff have been given specialist training from the National Crime Agency on recognising fraudulent documents,” says Marc von Grundherr, director of Benham and Reeves.

“Unfortunately, the majority of referencing companies do not even collect ID and proof of address and conduct referencing as a side-line, in order to up-sell other services and earn commission.”

“Letting agents using one of these companies or making checks themselves are highly likely to end up with these fraudulent chancers flying in under the radar and into a rental property,” he says.

“It’s the professional duty of all agents to properly validate the tenants they are providing to their landlords and failing to do so with the utmost vigour simply isn’t acceptable.”  

  • David Robinson

    "....as tenants know they won't have to pay if they fail a referencing check". But they will lose their 1 week's holding deposit if they provide misleading information.

  • Paul Barrett

    Hmm!!
    Failing a reference check.
    That is a rather subjective moot point.
    What is reference failure!?
    It could mean so many things.
    A LL could accept many holding deposits and fail tenants as there is no right or wrong answer when it comes to referencing except RGI qualification.
    So lots of possible holding deposits with only one accepted.
    Tenants won't know that other tenants have paid holding deposits.
    A LL can easily remove a listing and then put it back.
    Tenants won't be allowed to see their referencing as they haven't paid for it.
    But they will lose their holding deposit...............................which for most will be about the same fees as they used to pay before the TFA!!!!!!!

  • icon

    Fake referencing has been on the rise for a number of years and the attempts to dupe referencing companies have been getting smarter and smarter.
    From fake documents, setting up fake websites to setting up companies to allow the fraud to take place.
    If ever there was a time where your referencing should be being completed by an experienced referencing firm, worked on by experienced referencers this is it. If you're using a cheap company and doing referencing in house the reality is you probably don't realise the level of fraud you are exposed to.
    This is exposing your landlords and YOUR business to extreme risk - but hey you saved a £5 on your reference.
    Use quality, experienced referencing companies people - you buy cheap, you buy twice.

  • Paul Barrett

    Most British fraudsters will be caught out when the LL requests access to their free credit files.
    Any fool can see the financial status of a tenant prospect by reviewing credit files..
    Any who refuse a LL access to their files will be discounted from any further consideration of them as a possible tenant.
    Easy to check Companies House whether a genuine company.
    Passports difficult to fake.
    Wage slips and bank statements together would have to be identical payments.
    Indeed a LL could carry out such checks with no real cost.
    If desired then once all but one have been eliminated then a LL could if desired pay for formal referencing especially if desiring RGI on the tenant.
    Very easy to detect fraud with a few simple free checks.

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    I'd like to agree with you but cannot I'm afraid. The sophistication of the fraud has developed and now fake companies are being set up with the same names as the "real company" but with maybe a minute detail different and generally most inexperienced people will be caught out.
    Websites are developed to look identical to the real ones, you need tracking on IP addresses to see if references have been provided by the same PC and internet address.
    Documents can be faked and purchased online with ease and credit files will only tell you so much.
    Whilst I'm sure if you have the time and inclination and the experience you possibly could find some of the fraud examples, without help you wont find all.
    And in my considerable experience most landlords won't and don't check to this level, most agents certainly think they do but don't at all.

    It is IMO one of the single biggest risks impacting Landlords and Agents - the real truth is that an awful lot of "experts" think they carry out referencing in the same way that the Referencing experts do, fact is they don't.
    End of.

     
  • icon

    Couldn't agree more with you Mark Tidridge, the fraudulent tenants are using more and more sophisticated ways of getting through. For example, companies can achieve a high credit rating by submitting fake accounts to Companies House, you cannot just take a positive company credit check alone to give you a green light to enter into a company let. Fake passport are getting better, fake bank statements will still show income in and can be accompanied by fake payslips, only experts can recognise the tiny inconsistencies. Some referencing companies carry out full checks without collecting photo ID and proof of address, this is utter madness in my opinion, the applicant's are, in effect, self-credit checking in those cases, all they need to do is type in a wrong house number and they won't be found.
    There are so many layers involved when carrying out referencing - expertise and experience, tracking IP addresses, talking to people, ensuring the referees are genuine, examining all docs, carrying out Land Reg checks on landlords when necessary, I could go on and on. Many of the fraudsters will rent properties to sublet, take a years' rent from the subletter then disappear, some do this to carry out serious crime and rent several properties under fake identities in order to do so.
    Using tick box referencing companies is a very risky business.

  • Paul Barrett

    Yes I get there is a lot of sophisticated fakery out there and with the TFA LL are now disincentivised to carry out thorough referencing due to the cost.
    No LL can afford to pay for multiple exhaustive referencing for every Johnny come lately tenant applicant.
    I do not see why the Tenant Referencing Passport system cannot be used to produce effective referencing.
    However there is some uncertainty as to whether it is possible for a LL to advise a tenant prospect that UNLESS they provide their TRP to the LL they will not be considered.
    This is NOT the LL requiring a tenant prospect to obtain their TRP at their cost as the LL is perfectly entitled to state that they are NOT prepared to pay for a tenant prospect to be referenced but that if they do show a TRP to a LL then that LL will CONSIDER them!!
    LRS are running scared currently and have withdrawn their highly effective TRP product.
    They are attempting to find out from the PTB whether a TRP purchased by a tenant prospect to be in with a chance of being considered by a LL is breach of the TFA.
    The TRP methodology is a highly effective form of referencing.
    A tenant should only need to purchase one TRP valid for 3 months to then be able to approach multiple LA and LL with their one TRP.
    If the the TRP is that good it might even qualify the tenant prospect for RGI.
    Without a TRP facility many tenant prospects will struggle to even be considered by LL.
    Preliminary enquiries will result in many tenants being rejected whereas an effective TRP paid for by the tenant could well encourage a LL to take that tenant on.
    As it stands currently LL are going to be increasingly selective so as to avoid taking on a wrongun tenant of which there are millions!!!
    Personally I would like to see a State run TRP service like a driving licence.
    If you want to rent you get a TRP from the State.
    Cost would be about £100.
    But that would be it!!
    A lot cheaper than tenant fees used to be.
    You need a Passport to leave the country why not a passport to be able to rent if the LL chooses you!?
    It would also solve the problems if R2R as it would be the State determining the status of the tenant.
    It would also ensure that the State would be able to provide certainty as to many tenant's status so that a Windrush issue doesn't occur again!

  • Paul Smithson

    I referenced someone through a company ending with FAX in their name, one month later I get a letter from official receiver to say the new tenants had been made bankrupt so contacted reference company who advised “they were not bankrupt on the day that we referenced them” and that’s all they would repeat.

  • Paul Barrett

    Supplying fake references should be a criminal offence.
    Surely it is trying to achieve a service by deception.

    Fraud surely!!??
    But there is no doubt about it LL and LA are now up against it.
    It is an impossible situation for LL and LA.

  • icon

    Criminal offence, - Yes Paul.
    But too many landlords have bad experiences in getting the Police to expend their scarse resources on what they ( wrongly ) try to pass - off as Civil matter.
    Look at the London Sub-Letting scam on my PossessionFriend facebook

  • Suzy OShea

    Paul Barrett,

    I agree it ought to be. Supplying fake details on your CV is also a fraudulent crime!

    It seems employers are legally protected better than landlords, who everyone loves to hate and villify!

    Suzy

  • Paul Barrett

    Perhaps we should be using the services of private detectives!!!??
    With effective FREE referencing for every Johnny come lately it seems the doors have been opened for anyone to game the system to obtain a tenancy.
    All a fraudster has to do is pay the deposit and 1st month's rent and then not pay anything.
    Wait to be evicted could be an extra 8 months of free accommodation!!!
    Courtesy of the poor old LL!!
    Do that 3 times and a fraudster tenant could have saved enough for a deposit on a house purchase!!!
    The world has gone crazy.
    There will be a lot more nightmare tenants than slum LL in the coming years.
    Personally I will be using LRS who offer the facility of sending a checkmyfile link to a tenant prospect to enable them to send the full reports from all 3 CRA to the LL.
    As this is free there is no fee ban to consider.
    I would suggest that at least 75% of tenant applicants won't bother sending their Credit reports to the LL.
    So that will be an ideal filter for LL.
    Any who do send their reports can be whittled down by the LL to leave most likely bona fide tenant applicants who can then be subjected to more intense referencing by LRS.
    £40 per tenant apparently.
    Use LRS referencing and if RGI qualification occurs that costs £150 for an annual policy for up to £50000 including legal costs.
    Of course there are other referencing operations out there.
    But they only check soft searches not hard credit searches.
    Only banks and the consumer themselves can see hard credit searches.
    Of course with the tenant applicant sending the free credit reports to the LL email address for free will give lots of valuable information..Very few few fraudsters are able to construct false credit profiles.
    This is what I will do in future.
    I simply cannot afford to pay for referencing for every Johnny come lately..So I will have to become more selective.
    This inevitably means without a valid passport I will reject a lot of tenants.
    My advice to tenants would be to obtain a passport and Register for accounts with the 3 CRA.
    These are
    Credit karma
    Clearscore
    MSE Credit Club.

    You can register with the CRA directly which are

    TransUnion
    Experian
    Equifax.
    Everyone should access their free credit reports.
    It costs nothing and you never know when you might want your credit files to be correct.
    Before any credit application or other usage of credit file information ensure the details are correct even if detrimental.
    You only want to be assessed on CORRECT information!!!

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    Paul I have a five page form for my tenants to complete before I undertake any referencing. It is amazing how many just refuse to even fill in their name (80%) but still expect to move in with no rent and no deposit. They of course do not get any accommodation from me.

     
  • Paul Barrett

    Five pages!!??
    Crikey off the top of my head I doubt I could think of sufficient enquiries to do 5 pages.
    Obviously it is a very effective filtering tool!!
    Any chance you could disseminate your IP amongst the LL community.
    It could assist to protect against a lot of wrongun tenant applicants.
    I'm amazed at the very high percentage of applicants that aren't prepared to do the paperwork.
    Makes you wonder are they serious tenant applicants or perhaps they move to other LL who have perhaps less stringent application conditions!?
    Either way at least you don't end up with them!!

    icon

    Anybody who contacts me through property 118 or Landlord Referencing will be sent a copy.

     
  • icon

    David - That's a great example - 80% refuse to fill in their name.

    Yet there are new referencing companies setting up who literally do the following :
    1)Ask you to complete basic details of the tenant online
    2)They send digital documents to the tenants who complete everything
    3)These documents are then sent back to you the LL / Agent - and hey presto you have a "COMPLETED" FULL REFERENCE !

    Utter waste of time in my opinion - but hey it only cost £5 ! no wonder !!!

    Good referencing companies are not difficult to find - I'm sure you know the main names - HomeLet / Let Alliance / Rentshield / LetRef / Lettings Hub and so on and so on. All of these firms have been in this business for 10 years plus. They know their stuff and that means they understand Fraud / they understand GDPR and they all effectively BUILT referencing platforms.

    No matter what LL try and do - if you circumvent the system and use your "own" process - chances are you're missing something. And in reality you're paying c. £25 for a reference. It's a pittance for what it could really cost you if it goes wrong.

    Fraud will continue to increase.

    Paul Barrett

    The main issue though is few LL can afford full quality referencing at the outset.
    So filtering out of applicants is necessary before it is worthwhile the LL paying for proper referencing.
    You really only want to do it once!
    I wonder how many LA will use the thorough referencing firms as you suggest!?

     
  • Paul Barrett

    @dave price

    Great I will contact you via LRS for a copy.
    I guess you could also use your form for lodgers!?
    Though as it is easier to get rid of lodgers perhaps not such an onerous application process is required.
    Though of course you still wouldn't want a dodgy lodger in your home!!

  • icon

    The answer to your last question Paul is - Not Enough !

    Too many are looking to shortcut this process and go "cheap" to offset the income they have lost. Huge false economy, not looking after their Landlords and will only end in pain.
    That will all play out over the coming months.

    Quality Tenant Referencing is the start of the process - it needs to be done right - lots of red flags are picked up at this point if you know what you're looking for. And that's the knowledge most don't have I'm afraid. I see it day in day out.

    Once they're bitten by a bad tenant "one bitten, twice shy" always comes in and in effect - you buy cheap, you buy twice.

    Paul Barrett

    Yep I like to think I know I'm pretty shrewd but I accept these proper referencing operations have vast experience that I will never achieve in my lifetime.
    So as you suggest it would be wise for the average dummy LL and I include myself would be well advised as you suggest to use a proper referencing operations which costs more than £5!!!
    I can see far more substantial losses occuring to LL as a result of poor referencing.

     
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