The Build to Rent sector is being targeted by criminals with a 364 per cent rise in fraudulent tenant applications in the past six months.
That’s the figure produced by due diligence consultancy Homeppl.
The consultancy says BTR’s apparent luxury - with the cost of onsite extras and utilities bundled into the monthly price, and often no deposit being expected - has become the reason why the sector is being targeted.
The fact that utilities are included, and no deposit is due means that potential fraudsters not only avoid upfront costs (inability to pay a deposit would usually be a red flag) but also, they only need to pass one identity check before being approved by the letting agency, making it easier for them to get away with a fraudulent application.
The landlord is then left vulnerable legally and financially, with losses potentially running into the tens of thousands thanks to unpaid rent and utilities, damage to the property and legal costs.
Alexander Siedes, Homeppl chief executive, says: “In the last 3 months one of Homeppl’s clients found 3.5 per cent cases of fraud in the build to rent sector, which highlights the vulnerability of the sector and the property agents who act as landlords … Most checks are unable to reliably detect fraud or authentic data.”
Siedes says that as the BTR sector continues to grow, the problem of rental fraud will only increase.
“The sector was initially driven by demand in London - and that is still where most incidences of tenant fraud take place as the properties tend to be high end and therefore a target for illegal subletting - but the trend has now spread across the UK. This brings the total size of the sector to 205,500 homes completed or in development. And as the sector grows, so will the fraud.
“The companies looking after these developments need to ensure they have procedures in place to identify these issues and stop them before the losses become unmanageable as this will have a detrimental impact on the market at a time where demand for rental properties has never been higher.”