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Sharp rise in fraudulent letting applications

The level of fraudulent rental applications being received by letting agents is on the up, new research shows.

The study by Benham and Reeves reveals that fraudsters are becoming far more sophisticated when it comes to forged documents and the tactics being used.

According to the research, fraudulent lettings applications are up from six per month in 2018 to 13 per month so far this year, as rogue operators seek to fool letting agents and landlords.

Using data from their referencing agency, LetRef, Benham and Reeves found an average of six fraudulent applications a month in 2018, using either fake bank statements and fake or cloned employers in order to pass the referencing stage of the tenancy process. So far this year, this has already hit an average of 13 per month - a 117% increase each month.

The number of fake passports alone has more than doubled. Five cases were recorded last year, and yet this has already increased to 11 cases so far this year.

The increase in fraudulent applications is largely due to criminality with those looking to fraudulently rent doing so to sub-let/rent in the short-term to holidaymakers and others at a hugely inflated rent, often paying no rent themselves and vanishing once bailiffs attend, taking everything in the property with them.

Others wish to use the property as a brothel which often ends in the property being trashed as well, or for other immoral motives such as drug dens which again, can cause considerable damage to the property.

Given the high rent being asked, particularly in London, the proceeds can be substantial and with such a poor housing court system to evict tenants, landlords run huge risks.

With the recent introduction of the Tenant Fee Act 2019 meaning letting agents can no longer charge tenants for references, Benham and Reeves fears that the level of fraudulent applications will continue to increase as these applicants know it will not cost them a penny should they fail, all while landlords foot the bill.

In June, the number of fraudulent cases has already increased to 16, above average despite the short time the ban has been implemented. 

However, the problem goes beyond fake bank statements and more worryingly, Benham and Reeves has seen the number of fake passports alone has more than double. Five cases were recorded last year, and yet this has already increased to 11 cases so far this year.

Marc von Grundherr, director of Benham and Reeves, said: “This surge in fake applications is a very worrying statistic for a rental market that is already straining under the current requirements of a ‘Generation Rent’ and this increase demonstrates the importance of using a bonafide referencing company, where staff have been given specialist training from the National Crime Agency on recognising fraudulent documents.

“Unfortunately, the majority of referencing companies do not even collect ID and proof of address and conduct referencing as a sideline, in order to up-sell other services and earn commission.

“Letting agents using one of these companies or making checks themselves are highly likely to end up with these fraudulent chancers flying in under the radar and into a rental property.

“We are one of only a small number of agents who aren’t passing the cost of a thorough referencing service onto landlords despite the changes to legislation, and we will continue to ensure that the appropriate checks are being made. It’s the professional duty of all letting agents to properly validate the tenants they are providing to their landlords and failing to do so with the utmost vigour simply isn’t acceptable.” 

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