By It won’t be a surprise to learn that fraud is on the rise. Along with scams, cybercrime and fake news, it’s endemic in the modern world.
We ignore it at our peril – fraudulent activity is becoming ever more sophisticated.
According to LegalforLandlords MD Sim Sekhon, our awareness and defence strategies need to follow suit.
It’s hard to get precise details on the scale of the problem. However, in its 2020 Fraud and Corruption Tracker, CIPFA reported that ‘other tenancy frauds’ including false applications was the fastest growing area in housing fraud.
Costs were estimated at £60.1m compared to £47.7m in the previous year.
While these figures relate to the public sector, we’d be foolish to expect that private landlords aren’t also being targeted.
It would also be a mistake to ignore the implications of the current cost-of-living pressures.
As rents rise and the supply of affordable housing shrinks, tenancy applicants might feel they have little choice but to ‘inflate’ their income or fake their employment history to secure a property.
We asked Sekhon whether the LegalforLandlords team were finding examples of this type of fraud.
He told us that it’s a regular occurrence, saying, “Only this week, we had an application where our detailed employment checks contradicted the applicant’s version – and in that case the landlord could well have been looking at significant losses. We’ve also seen previous landlord references that don’t quite ring true.”
The ready availability of technology can, of course, help applicants to produce fake documents that look convincing.
Payslip templates are easy to find on Google. Fake IDs aren’t difficult to get hold of.
It’s easy enough to set up an online presence for what appears to be a bona fide employer, but with diligence, cross-checking and understanding, most referencing providers who offer a detailed check should be able to spot issues.
The Referencing Team at LegalforLandlords scrutinise all payslips provided as proof of employment and income, looking for tax codes, recurrent payments, payments adding up and NI numbers.
Information must be in the right places and correctly formatted.
They cross check bank statements provided for proof of income and address.
Often they find layouts and formats that look suspect, strange fonts and inconsistencies between income on the bank statement compared to that shown on the faked payslips.
Unfortunately, some referencing providers aren’t so committed and sometimes agents take their eye off the ball – when time is short, there’s pressure to get the let sorted, or when a friend of a friend says it’s all okay.
In this situation, technology can provide a solution to the problem of human error, and the number of options available is growing.
Aware of the tactics used by fraudsters, developers are constantly updating their software, refining it, and ultimately giving agents and landlords verified information on which to make their decisions.
Open Banking is perhaps one of the most well-known options available, but many other solutions can be used, including identity verification software and email address recognition.
LegalforLandlords has been swift to recognise the benefits of Open Banking in its referencing provision.
Its Right to Rent Check service is backed by Government approved ID verification technology, and it will soon be adding document validation to its services.
We asked Sekhon whether, as an early adopter of these anti-fraud measures, he believed technology would provide all the answers to fraud in tenancy applications.
He said, “It’s certainly one of the best defences we have, but we must keep our guard up. The fraudsters aren’t going away.”
While Sekhon’s remark might seem gloomy, it offers a perspective that the property rental sector would do well to embrace.
The costs of fraud on a landlord’s income, investment and mental health can be enormous.
With fraud increasing, the message must be drilled home: check everything, every time, use the best tools available and never trust to luck.
LegalforLandlords is a leading supplier of tenant referencing, legal services and insurance to the property rental sector. Contact the team on 0344 567 4001 or visit legalforlandlords.co.uk
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