Last time in Landlord Natter we took a little bit of a swipe at the Landlord Database proposed in the Renters’ Rights Act as a measure to crack down on rogue landlords.
And to be fair, Landlord Today readers are often among the first to complain about rogues in their own ranks. Bad landlords, they argue, damage the reputation of thousands of perfectly decent operators who provide good homes and look after their tenants.
But what happens when the boot is on the other foot and the rogue is on the other side of the tenancy agreement?
Research highlighted by Landlord Today last week certainly produced a startling number. Goodlord claims fraudulent tenancy applications could expose the PRS to up to £4.1 billion in direct financial losses every year.
Before anyone faints, an important distinction: this isn’t £4.1bn that has demonstrably disappeared from landlords’ bank accounts. It is an estimate of potential exposure, extrapolated across the wider sector.
Even with that sizeable health warning, £4.1bn certainly gets your attention.
And the fraud itself appears to be becoming more sophisticated. We are no longer necessarily talking about somebody adding a bogus digit to a payslip. Fake employment references, manipulated identities and increasingly convincing documentation create an obvious challenge for those trying to establish whether the person standing in front of them is genuinely who they claim to be. Easily accessible artificial intelligence adds another potent weapon to the fraudster’s armoury.
Our readers didn’t need much convincing that this is a real problem.
One contributor described a relative pursuing tenants who had allegedly disappeared abroad owing £10,000, with losses potentially reaching £30,000 once damage was included. She said the property had also been illegally sublet and described more than a year of extreme stress while possession was recovered.
Others questioned whether referencing processes are keeping pace. Ken Sheehan wondered whether even information used in conventional checks could potentially be manipulated using AI.
Inevitably, somebody suggested a Rogue Tenant Database.
But after our last Landlord Natter about the proposed landlord database, perhaps we shouldn’t rush to create another one.
Who decides that somebody is a rogue tenant, on what evidence and with what right of appeal? Someone losing their job and falling into genuine rent arrears is very different from someone deliberately falsifying their identity or financial circumstances.
There is a bigger point here.
If that £4.1bn estimate is anywhere near the right postcode, the potential losses don’t stop with landlords.
The Treasury may have some skin in this game too. Fraudulent rent that is never received cannot produce taxable landlord income. Money spent repairing deliberately damaged properties isn’t available to be invested elsewhere. There are potential costs for letting agents, insurers, courts and other businesses as well.
But potential economic damage on that scale isn’t simply a private matter between landlord and tenant.
And perhaps this is where the debate becomes more interesting.
Most tenants aren’t rogues, just as most landlords aren’t rogues. The overwhelming majority on both sides enter into a tenancy expecting the other party to honour the bargain.
We quite properly spend a great deal of time discussing how tenants should be protected from landlords who don’t.
Perhaps there is room to spend a little more time considering what happens when the position is reversed.
Mister Larson put it rather neatly in the comments: landlords and tenants are “symbiotic and need each other.”
Maybe that’s the principle policymakers should start with.
Good legislation shouldn’t protect tenants from landlords, or landlords from tenants.
It should protect good tenants from bad landlords – and good landlords from bad tenants.
Until next time,
N
