LANDLORDS BRACE  FOR  FURTHER RISES IN FRAUDULENT TENANCY APPLICATION ACTIVITY.

A recent white paper published considered a combination of factors i.e., job losses, the softening of eviction regulations including the low consequences for fraudulent rental applications, and concluded that this had created a difficult environment for landlords.

According to National Residential Landlords Association (NRLA) figures 11% of renters are currently unemployed – double the UK unemployment rate of 4.8% – and as many as 840,000 private renters in England have built up arrears since the pandemic started in March 2020.

More than half (56%) of landlords have therefore lost rental income as a result of the pandemic, and 2.2% with buy-to-let (BTL) mortgages were found to be in arrears, compared with 0.3% of homeowners, with the number in serious arrears up 8% on last year, according to UK Finance Arrears and Possessions 2021 data.

Other data suggest a 71% increase in the number of fraudulent applications between the second half of 2020 and the first half of 2021, equating to 1 in 50 rental applications being fraudulent, rising to 1 in 20 in London.

Legal costs and lost rent mean each fraudulent tenant can costs on average more than £30,000, whereas the tenant is at very little risk.

Alexander Siedes, CEO and founder of Homeppl, said: “The consequences for landlords of inadvertently approving a fraudulent application are dire – up to £30,000 in lost income and legal costs and fines of up to £3,000 for renting to a tenant with no legal right to rent in the UK – but for the tenant, there is little risk.

“In a worst-case scenario, scammers will lose their holding deposit, but there is little to de-incentivize them from making further fraudulent applications.

“When you add to that the softening of eviction regulation which means landlords have less power to evict fraudulent tenants, increasingly, scammers are renting properties with the intention of illegally subletting them to make easy money, at a huge cost and risk to the landlord.”

He added: “It has therefore never been more important for agents to ensure they have access to the latest verification technology, fraud detection tests, behavioral analysis, and financial algorithms, as well as Open Banking data, so they can ensure they can accurately and safely facilitate tenant referencing to approve legitimate tenants and avoid losing thousands from fraudulent activity.”

Source: HOMEPPL 2021