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Surge in Fraudulent Tenant Applications

The number of people within the UK that are choosing to rent their next home has doubled over the years since 2002, with almost 5 million properties across the nation now being rented privately. With the typical assured shorthold tenancy lasting around 20 months, this means that landlords have perhaps never faced a more demanding time in recent years. However, the last year or so has had an undeniable detrimental influence on all aspects of not just the rental industry, but economic factors on a global scale, seeing record numbers of tenants have their regular income slashed alongside working hours and consistent employment.  The UK charity StepChange lends figures to these events, revealing that since the introduction of the first lockdown measures in March 2020 around 40%, or 19 million adults have had their income devastated by the results of the pandemic.

Recent months have seen renewed concerns across the rental industry regarding the number of fraudulent applications being made for rental opportunities by aspiring tenants.  The Independent reports that the amount of tenants seeking out misleading practices in order to obtain their next home has skyrocketed across the first half of the year, with a single tenant referencing firm experiencing a 72% rise in the number of fraudulent applications it has received from tenants when compared to the first half of 2020.

Chief Executive of the due diligence and guarantee firm Homeppl, Alexander Siedes, stated that, “one in 50 of all tenant applications we handled in Q1 2021 was fraudulent.” After revealing that in some areas of the nation’s capital the number of fraudulent applications could be as high as every one in 20, Alex further lends some explanation as to why landlords and letting agents are seeing such an aggressive rise in such cases saying, “Amateur fraud occurs when tenants aren’t earning enough to afford the property and this type of activity seems to have risen as a result of the pandemic which could be due to tenant being on furlough or losing their jobs.”

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Homeppl further revealed that not only had the amount of fraudulent applications increased within the private rental sector across the first quarter of 2021, a witnessing a rise from 1.5% in the previous year to 2%; but the value of these deceitful applications had soured by three and a half times than the previous quarter.

As stated, the rise in fraudulent activity is mainly seen across an amateur level, with the most typical examples and technics seeing the aspiring tenants try and fool the letting agency and landlord with illegitimate identification documents, passports, driving licenses, alongside employment confirmation, wage slips and bank details. This is not to say that the desperation these renters find themselves in, or their assumed inexperience in these dealings means each fraudulent application is a dead giveaway as there have been cases of false contact details for employers, alongside convincing websites, online presence and correspondence; all of which is unearthed during the referencing process.  

With this in mind it is hard not to see how some may have resorted to these underhanded practices, at a time when a number of tenant campaign groups are also issuing a stark warning that the nation is currently on the brink of a homelessness crisis brought about by the wave of eviction proceedings that are to be kick started once current restrictions implemented by the Coronavirus Act 2020 are retired.

The Impact of the Tenant Fees Act 2019

Unfortunately, fraudulent applications for tenancies across the nation are nothing new and have been a thorn I the side of rental property owners for a number of years. Whilst perhaps not to the same scale as previous years, the justification of being simply priced out of the market through rapidly increasing prices as landlords look to recuperate heavy losses is similarly historic. Some have made arguments that after the introduction of the tenant fees act 2019, which aimed to make the private rental sector more accessible by abolishing the all too common practice of allowing landlords and letting agents to charge renters excessive administration fees associated with letting a property, alongside placing a definitive limit on the amount a landlord is able to request from their tenants for the tenancy deposit. Leading up to and soon after the enactment of these regulations many stated that these would actually have a negative impact for those choosing to rent a property as letting agents and landlords would simply look to gain these costs back elsewhere, most commonly through an increased rental fee for the property. However, some have also revealed that since the implementation of the tenant fees act, as the aspiring renters are no longer being charged for these referencing checks they will therefore not be penalised if these checks are not successful, or more pressingly, the information provided to the landlord was falsified.  It could also be argued that as with the overwhelming majority of letting agents and third party referencing companies, landlords are charged for each tenant that they wish to evaluate, making this an incredibly costly process, leaving some to simply bypass it altogether; however given the potential ramifications when doing so this is highly unlikely.

How Can Landlords Combat This?

Typically when discussing applications that are likely to be turned down by a landlord, all too often is the focus placed on the financial suitability of the aspiring tenant. Now yes, this is certainly something that should not be dismissed, after all if the tenant is unable to meet their financial obligation to make regular rental payments then this will only result in the landlord pursuing eviction and repossession of the property after the tenant accumulates excessive rent arrears.  However, solely evaluating a prospective renter’s applicableness through their credit history and annual earnings neglects to account for so many of the arguably more sinister shortcomings of a potentially bad tenant.  

With this in mind, if a landlord wishes to not only avoid the classic nightmare situation of an occupant accumulating high amounts of rent arrears, or their rental property facing malicious, or excessive damage during the tenancy, but to also successfully navigate an increasing amount of fraudulent applications they must comprehensively assess each aspiring renter with the proper referencing checks.

Whilst the exact criteria for these referencing checks will change depending on where a landlord turns to have them carried out, a tenant will always be required to prove they are able to upheld their rental obligation to meet each payment on time. To this end the aspiring tenant will be required to show they have a stable employment and sufficient income, with a number of recent wage slips and bank statements being provided to the reference company and landlord. Further to this the tenant must be able to demonstrate they have not withheld any historic debts, with a thorough credit check being conducted, being sure they have never been subject to a count court judgment, or neglected to repay any lines of credit they have taken out.

An invaluable and often understated aspect of the referencing process is the ability for the owner of the new rental opportunity to gain a character reference from the prospective renter’s previous landlord. This will prove to be an essential insight for the new landlords as this will provide them with a first-hand and recent account of the tenant’s conduct, if they have maintained good condition of the rental’s condition, consistently paid rent on time.

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Right to Rent Checks

Perhaps the most synonymous way in which a potential renter could try and mislead the owner of a rental property is through the right to rent checks. The right to rent checks were introduced as part of a wider initiative from the UK government intended to reduce immigration problems and reduce the amount of renters that are illegally residing with the UK. For every application the owner of the rental property receives for their rental opportunity, they must put the tenant through the appropriate right to rent checks at least 18 days before the tenancy period commences. In order to satisfy the stringent criteria established by the right to rent check, the occupants of the rental property will be required to supply the landlord with a series of official documentation such as a British, European or other non-European national identity card or passport. S In addition to this the aspiring tenant will also need to issue the landlord with a home office certificate or other photographic identification that proves they maintain the right to stay within the UK. With this being said, in the rare circumstance that the prospective residents of the rental opportunity are unable to produce any verification or authentic documentation in order to prove their right to rent, the landlords still has but one option left in verify the tenant’s right to rent. If no documents are available the owner of the rental property is still able to get in contact with the Home Office and utilise their “landlords checking service”, allowing them to get an indisputable answer in regards to the resident’s right to remain in the UK.

The consequences a landlords could face for neglecting to carry out these right to rent checks are severe to say the least, however this severity is not only dependent on the conduct of the landlord, but also their prior knowledge of the occupant’s right to rent. If the landlord is found to knowingly let out their rental property to a tenant that does not possess adequate right to rent within the UK then the owner of the rental property could face criminal proceedings under sections 33a and 33b of the Immigration Act 2016. If successful in the prosecution of the landlord, they can expect to face up to five years in prison alongside an unlimited fine that will be dictated on a case by case basis.  Further to this is the landlord is found to be in breach of the immigration act by knowingly letting out their property to multiple occupants that do not hold the right to rent within the UK, the owner of the property will be served with a £3,000 penalty for each tenant they hold an agreement with. This will also come alongside an enquiry into the landlord’s conduct by the home office.

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