The rental market is experiencing a significant upheaval as fraudulent tenancy applications see a dramatic increase, posing new challenges for landlords and agents alike. In a recent analysis by Goodlord, a tenant referencing firm, the figures are alarming, with a 140% surge in fraudulent applications detected between 2022 and 2023. This increase in deceitful behavior is driven by heightened competition within the rental sector, pushing some prospective tenants to resort to dishonest measures to secure a home.
The Surge of Dishonest Applications
Goodlord’s comprehensive review spanned over 300,000 applications each year, uncovering a rise from 1.2 to 2.9 cases of fraud per 1,000 applications from 2022 to 2023. The most prevalent form of deceit involves the manipulation of payslips, where applicants either boost their income figures or modify the income source entirely. This trend points to the desperation among some renters to stand out in an increasingly competitive market.
Understanding the Pressure
Nishma Parekh, Goodlord’s head of referencing, says, “Fraud can come in many forms. In some instances, tenants who are desperate to secure a property think bumping up their salary will help seal the deal.” She highlights the pressure the current housing market exerts on individuals, driving them to make such fraudulent decisions. However, Parekh cautions against such actions, warning of the long-term consequences, including potential listing on the National Fraud Database, which could hinder future job prospects and the ability to secure loans.
The Role of Digitalisation in Fraud
The digital age brings with it new challenges in the fight against tenancy application fraud. Criminals are now employing more sophisticated tactics, including the use of fake IDs and forged documents, to deceive landlords and agents. This complexity underscores the need for robust referencing practices and the adoption of advanced technology solutions, such as Open Banking and AI, to identify and prevent fraudulent attempts.
The Darker Side of Tenant Fraud
Parekh warns of the “darker side” of tenant fraud, where criminals secure properties using false identities or applicants attempt to sign tenancies with forged documentation. This escalation in fraudulence necessitates a response that includes access to cutting-edge technology for landlords and agents. It’s essential for them to have the tools to protect themselves and ensure they can lease their properties in good faith.
Combating Fraud Together
Goodlord suggests that a combination of skilled referencing teams, trained to spot red flags in applications, and technological advancements can significantly mitigate the risks of tenant fraud. Collaboration with entities like HMRC, payroll providers, the fraud database, and Open Banking is also crucial in forming a comprehensive approach to tackling this issue.