Two PropTech companies say tenant fraud - reported to be a growing problem in buy to let - is now an issue in the Build To Rent niche as well.
Deposit alternative firm flatfair and referencing company Homeppl, in a joint exercise, say they have prevented £130,000 in fraudulent activity hitting one BTR operator alone over on ly four months.
Homeppl’s data suggests that 1.5 per cent of tenant applications are fraudulent, which could mean that more than 1,265 applications for Build To Rent units could pose a risk of massive cost bills or other issues for operators.
The two PropTech companies say that separate research has shown the cost of evicting a rogue tenant can be £31,000 when lost rent and legal fees are taken into account.
Flatfair chief executive Franz Doerr says: “As investment in the Build To Rent sector continues to grow, it is vital that operators are protected from tenant fraud to ensure their focus can be on providing a best-in-class service to legitimate tenants … Technology can play a huge role in streamlining the process.”
And Ben Harris, head of commercials at Homeppl adds: “It’s been an immense period of change for the sector more broadly, so we are hopeful that we can do our part in keeping it robust and stamp out deceitful behaviour.
“Tenancy fraud is a growing issue and solving these problems requires specialist technologies and expertise to keep landlords protected. We look forward to working with the team in this space.”
Separately, a statement last month from the ARLA wing of Propertymark says fake bank statements, references and payslips are increasingly common meaning landlords and agents are at greater risk of fraud.
Propertymark member agency Tay Letting saw a tenant submit fraudulent bank statements, income tax returns and a credit check, and ultimately obtain a high-end property in 2019.
With the eviction ban in place across Scotland for over a year, the tenant was able to live rent free for several months, until finally evicted this summer with over £60,000 of arrears.
Lorna Taylor, director of Tay Letting, says: “To guard against these fraudulent applicants, we now send all applications to an independent referencing agency as a matter of course to verify as far as possible that the information we have received is legitimate.”