4 ways a letting agent could prevent rental fraud
Rental fraud exists and without professional support, landlords can leave themselves vulnerable to criminal activity.
While there is plenty of coverage in the press given to rogue landlords and letting agents (there’s even a database you can search) there is little published about rogue renters. LandlordZone estimates that 1 in 20 tenants will cause landlords a problem relating to fraud, ranging from using friends to pose as employers at the referencing stage to taking out a mortgage on the rental property using fake ID and running off with the money.
Landlords place their trust in tenants they don’t know, asking them to become guardians of their most valuable asset. The law even states that landlords are not allowed to freely visit a rented property they own to check on its condition, so how can they avoid the perils of a less than perfect tenant?
Using a letting agent is a good place to start as in return for a management fee, the property professionals will undertake due diligence and use industry-specific tools to ensure only the best tenants are put forward to rent a property. Here are four 4 ways a letting agent can help fight rental fraud:
1. Referencing is taken seriously: many agents have database systems that give them unique insights into the suitability of a tenant. Reapit, for instance, has partnered with Homeppl to combat rental fraud. Its tenant referencing system leverages Open Banking, fraud detection tests and behavioural analysis to confirm tenants’ real creditworthiness and transactional ability. In addition, good referencing should be able to spot ‘deep fakes’ when it comes to ID, documents and contacts.
Referencing is also vital in the war against property hijacking - where a landlord’s identity is stolen by criminal tenants in order to sell their rental property - a type of crime that has tripled in the last four years, according to üPad - with an estimated £25 million made by fraudsters.
2. Credit checks are performed: knowing a potential tenant’s past financial habits will give a clear indication of their ability to pay the rent in the future. A credit check should be a mandatory part of a letting agent’s pre-tenancy administration, with the results revealing if the tenants have previously struggled to repay debts and if there are County Court Judgements (CCJs) or insolvency solutions on their file.
3. Regular inspections are scheduled: although tenants have the right to the peaceful enjoyment of their property, authorised and scheduled visits are permitted, with an agent responsible for this action. Inspections are essential not only to ensure the condition of the property but also to check for signs of subletting – when the tenant turns landlord and moves other people into the let. Subletting is an open door for unreferenced tenants to move in, and can also compromise a landlord’s mortgage and insurance.
Inspections should also spot signs of illegal activity. Landlords of short lets and Airbnbs may need to schedule more regular inspections as there are a growing number of ‘pop-up’ drug- and brothel-related lets but a mid-term visit for all rentals should be the very minimum.
4. AML protocols are followed: property is one of the most attractive ways to money launder and the lettings sector is frequently used by criminals. It’s not unknown for a launderer to acquire a buy-to-let then attempt to rent the property to someone in their criminal organization, with some or all of the money involved being ‘dirty cash’.
Thankfully, all letting agents who manage properties that, individually, command a monthly rent of 10,000 Euros or more (high value rentals are most favoured by fraudsters) need to comply with anti-money laundering and terrorist financing regulations.
If a property you are managing or renting out needs hands-on supervision with rental fraud in mind, Viewber can help with reports and inspections. From drive-by visits to internal tours with photo and video evidence, we can visit any UK property, usually at short notice.