HomeLet, the UK’s largest referencing firm, has reported a significant rise in fraudulent tenancy applications, now receiving nearly 200 per day.
This increase is not only due to criminal activity but is also driven by desperate measures from individuals amid the current market conditions.
The lettings market is facing a crunch with landlords selling properties rapidly due to soaring interest rates and stringent government policies, leading to a shortage in rental housing.
This shortage has resulted in fierce competition for properties, with over 20 applicants per rental, pushing rental prices to record highs.
The cost-of-living crisis exacerbates the situation, making it difficult for all parties involved in the industry.
Fraudulent applications have quadrupled over the past two years, with the advent of artificial intelligence and sophisticated software making fraud more strategic and complex.
The most common type of fraud involves altered bank statements, with 89% of failed applications in January 2024 being due to this issue.
To combat this growing problem, HomeLet is introducing VISTA, a tenant referencing solution designed to detect and prevent fraudulent activities. VISTA employs forensic assessment of electronic documents and a self-learning system to recognise visual alterations, complemented by human expertise to ensure accurate detection.
Andy Halstead, CEO of HomeLet and Let Alliance, said: “There are no winners in the rental industry at the moment, and without drastic change it will be the same for the next few years.
“What the Government fail to understand is the huge problems they have created for tenants, by making life difficult for landlords. Landlords are exiting the market in droves because of increasing mortgage rates and the stranglehold of new regulations.
“The lack of supply this creates means tenants are battling at least twenty other people to secure a home and paying record prices. When coupled with the cost-of-living crisis, it is a dire situation for all. As a result, we’re seeing fraudulent activity is surging. Not only from career criminals, who are cashing in on the chaos, but from people who would never dare commit fraud out of desperation to secure a property.
“A change in government is unlikely to help. Decisions are being made based on winning votes, often without the knowledge required to fully understand the consequences of the decisions. What is obvious to professionals who support the property rental industry appears to escape the minds of those in power.
“It has never been more important for the industry to look for solutions that tackle the issues head on. And the ‘old’ way of completing references is simply not good enough for todays and tomorrow’s market.
“A world class referencing and assessment service, that guarantees the rental income for letting agents and their landlords is essential.
“That’s why we have developed VISTA. Our customers have spoken, and we have listened and acted. Our new advanced referencing process VISTA surpasses all referencing solutions today.
“The result of three years research and development and an investment of over £3 million, VISTA will provide the highest protection for our agents and landlords in the face of the housing market crisis and rising fraudulent references.”
Rebecca Baker, head of customer operations at HomeLet, said: “Fraud is growing at exceptional rates in the lettings industry. Whilst we see many examples of people adopting a do-it-yourself approach with basic computer software, we’re receiving more intricate, complex examples of deception every day.
“From changing pay slip dates and employer details to hiding transactions and changing income amounts, the lengths people go to secure the property they want and, or make a profit from is quite incredible, but no longer surprising.
“To protect all those in the rental supply chain, we’ve combined data, technology, and people to detect even the most complex fraudulent behaviour. Advances in software and artificial intelligence are critical in detecting fraud, but in the same breath, without experts interpreting the technological advances and joining the dots, fraud would be even greater than it currently is.
“We’ve created an industry-first solution with VISTA and we’re at the forefront of protecting the letting industry for tenants, landlords and letting agents”.
