A comprehensive analysis of over 600,000 tenancy applications has revealed a significant surge of 140% in fraudulent attempts over the past year. This concerning trend, as identified by PropTech supplier Goodlord, underscores the growing challenges faced by landlords and property managers in vetting prospective tenants effectively.
Payslip fraud emerged as the most prevalent tactic employed by tenants to deceive referencing systems, according to the findings of the study. This alarming revelation highlights the importance of implementing robust verification processes to safeguard against fraudulent activities and protect the interests of landlords and property owners.
The analysis delved into a substantial dataset comprising over 300,000 tenancy applications from each of the years 2022 and 2023. By juxtaposing these datasets, a stark trend emerged, revealing a notable surge in fraudulent activities within the tenant application process. In 2022, the detection rate stood at just over one fraudulent case per 1,000 applications. However, by 2023, this figure had escalated to 2.9 cases per 1,000 applications, representing a substantial 140% year-on-year increase in fraudulent attempts.
Of the various fraudulent schemes detected, payslip fraud emerged as the most prevalent tactic employed by tenants seeking to deceive referencing systems. This fraudulent manoeuvre entails tenants manipulating information on their payslips, often by inflating their reported income or falsifying the source of their earnings. The methods employed in such fraud schemes vary widely, ranging from rudimentary alterations to more sophisticated techniques involving the use of advanced photo editing software. This alarming rise in fraudulent activities underscores the pressing need for landlords and property managers to bolster their vigilance and implement robust verification protocols to safeguard against deceitful practices in the tenant screening process.
Throughout the past year, a range of fraudulent tactics has been identified, including the submission of counterfeit passport images, falsified bank statements, fabricated references, and assertions of employment with fictitious companies. Notably, payslip fraud emerged as the predominant form of deceit, comprising a staggering 58% of all fraudulent cases detected and intercepted by Goodlord in 2023 alone.
Even one instance of payslip fraud slipping through the cracks could potentially cost an agent a lifetime landlord value of £10,000, highlighting the significant financial impact of such fraudulent activities. This underscores the critical importance of vigilance and robust safeguards to ensure the integrity of the tenancy application process and protect the interests of landlords and property agents alike.
Despite the overwhelming majority of tenancy applications being conducted in good faith, the escalating incidence of fraud underscores the imperative for implementing robust measures to safeguard against manipulation within the rental market. As such, it becomes increasingly crucial for agents and landlords alike to fortify their screening processes with stringent verification protocols to mitigate the risks associated with fraudulent tenant applications.
Nimesh Parekh, Head of Referencing at Goodlord, sheds light on the complex landscape of fraudulent activities within the rental domain: “Fraud exhibits a myriad of forms and nuances in our industry. Some tenants, grappling with the urgency of securing accommodation amidst competitive market conditions, resort to manipulating their financial information, such as inflating their income, in a bid to bolster their chances of securing a tenancy.”
“With the prevailing pressures in the housing market, it’s not uncommon to observe a pronounced uptick in such deceptive practices. However, it’s crucial to recognize the inherent risks associated with engaging in fraudulent behavior, as it can have far-reaching consequences. Being flagged on the National Fraud Database, for instance, can cast a shadow over future employment prospects and financial endeavors, including the ability to access loans and mortgages.”
“Moreover, beyond the realm of opportunistic deception, there exists a darker underbelly of fraud, where sophisticated criminals exploit false identities and forged documents to unlawfully procure properties. This underscores the imperative for robust screening protocols and heightened vigilance within the rental landscape to safeguard against potential exploitation and fraudulent activities.”
“With the evolution of fraudulent tactics and the digitalization of personal data, it’s imperative for landlords and agents to leverage advanced technology to counter these threats effectively. Access to state-of-the-art tools is essential for safeguarding their interests and enabling them to confidently let out their properties.”
“Goodlord emphasizes the importance of equipping referencing teams with the necessary skills to detect subtle inconsistencies indicative of fraudulent activities. As fraudulent techniques become more sophisticated, it is crucial for professionals in the industry to remain vigilant and adapt their strategies accordingly.”
