Rental scammers cost landlords £9.6k per tenancy, warns referencing giant
Goodlord says the cost to the rental sector is more than £4billion every year as AI helps scammers hoodwink landlords and letting agents.
Fraudulent tenancy applications are costing landlords and letting agencies £4.1billion a year – and the figure is rising, new research has revealed.
The research by Goodlord found that this kind of scamming has risen by 40% in the past 12 months with London leading the way.
It analysed more than a million tenancy documents in the past two years, and found that the direct cost of such fraud per tenancy is £9,600.
Lost rental income
The figure represents either lost rental income via illegal subletting or tenants who pay the initial rent but then stop paying, often knowing that it will take months to evict them.
Rates of fraud are running at between 41 and 46 per 1,000 transactions, outlining the risk posed by this kind of scamming to both agents and landlords, particularly as fraudsters become more sophisticated. The sector with the highest risk of such activity is the prime, £10,000-a-month, rental market.
While in the past single reference or identity documents have been faked to gain access to rental properties, Goodlord says criminals are now creating suites of bogus documents including landlord, bank and employment references or referees and manipulated IDs, often all created using AI tech.
Out of pocket
“Behind these numbers are real people and real money: landlords left out of pocket, agents’ time wasted, and honest tenants competing against fraudulent applicants for homes.,” says Nishma Parekh, Director of Referencing at Goodlord (main image).
“Rental fraud isn’t new or hypothetical: we’ve seen fraudsters operating first-hand. But what’s changing is how sophisticated fraud has become. Fraudsters are no longer relying on a single forged payslip – they’re building entire fake identities, combined with false employers and invented referees.
“The industry needs to move from spotting one red flag to identifying patterns across the referencing journey – and to consistently review those checks, as fraud tactics evolve.”
Chris Norris, the NRLA’s Chief Policy Officer, says: “This report should act as a wakeup call for landlords across the sector. The market is now falling prey to increasingly sophisticated types of fraud and landlords need to take every step to protect themselves from these risks.”
Read more about tenancy fraud.
