BTR is a ‘magnet for fraudulent tenants’ warns referencing platform
Firm Homeppl says BTR's habit of offering no-deposit and bundled utility bills makes their developments attractive to fraudsters to make money from sub-letting or deliberately getting into rent arrears.
Criminals are targeting the build-to-rent (BTR) sector, prompting a 364% rise in fraudulent tenant applications in the past six months, according to tenant due diligence and guarantee firm Homeppl.
Utilities are usually bundled into the monthly price at these developments, while there is often no deposit and tenants have the right to leave with short notice periods, making them a hugely attractive option for renters – and fraudsters.
Tenants not only avoid upfront costs, but they also 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. Fake wage slips, references and company details are used, and they will then either default on the rent or sublet it through short-let sites – and then default.
Vulnerable
Landlords are left vulnerable legally and financially, says Homeppl, with losses potentially running into the tens of thousands in unpaid rent and utilities, damage to the property and legal costs.
Alexander Siedes (pictured), CEO and founder, says that most checks are unable to reliably detect fraud or authentic data but that Homeppl employs unique fraud detection tests, which use behavioural analysis, financial algorithms and Open Banking data to validate someone’s identity and financial ability. As a result, clients have 0% defaults while the industry average is 8%.
He adds that as the build to rent sector continues to grow, the problem of rental fraud will only increase. “The build to rent 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.”
Read more about fraudsters who target the PRS.
