There’s a new warning the rental fraud could be on the rise.
Due diligence firm Homeppl says the combination of possible job losses amongst renters at the end of the furlough scheme, a softening of eviction regulations, and what it calls “no consequences for fraudulent rental applications” mean the threat of fraud is increasing.
According to the firm’s data, there was a 71 per cent increase in the number of fraudulent applications between the second half of 2020 and the first half of 2021 - that means one in 50 rental applications are now fraudulent, rising to one in 20 in London, it claims.
The company also alleges that legal costs and lost rent mean each fraudulent tenant costs more than £30,000 on average - but the tenant themselves are at very little risk.
“The consequences for landlords of inadvertently approving a fraudulent application are dire - up to £30,000 in lost income and legal costs and fines of up to £3,000 for renting to a tenant with no legal right to rent in the UK[ - but for the tenant, there is little risk. In a worst-case scenario, scammers will lose their holding deposit, but there is little to de-incentivise them from making further fraudulent applications” according to Alexander Siedes, chief executive of Homeppl.
“When you add to that the softening of eviction regulation which means landlords have less power to evict fraudulent tenants, increasingly, scammers are renting properties with the intention of illegally subletting them to make easy money, at a huge cost and risk to the landlord.”
He adds that the fraudulent activity is becoming increasingly sophisticated.
“It has therefore never been more important for agents to ensure they have access to the latest verification technology, fraud detection tests, behavioural analysis, and financial algorithms as well as Open Banking data, so they can ensure they can accurately and safely facilitate tenant referencing to approve legitimate tenants and avoid losing thousands from fraudulent activity.”