Why rental fraud is on the rise

“The house was perfect; it was near my son’s school, it was low rent and it was a really pretty house.”

Racheal, 32, is a single mum who works part-time and rents. Relying on the private rented sector means she’s had to move several times in recent years, and it’s often a struggle to find a suitable home near her son’s primary school.

When she saw an ideal home being advertised on her local Facebook selling page, she was delighted. Since there was no letting agent to go through, that also meant she could keep her costs down by going directly through the landlord and not having to pay an agent’s fee on top of a deposit. But then things became more suspicious.

“I was just Facebook messaging him about the house and he was fine with me renting it, he didn’t bother with references or anything, he said he could tell he could trust me.

“I thought that was weird because I hadn’t even spoke to him. Then he said I could go and view the house but I couldn’t go in because the current tenants wouldn’t let him show it. Then he asked me to transfer the deposit to him straight away because there was a lot of interest in it. I got really suspicious then.”

Fortunately for Racheal, that’s where her story ended. Suspicious about whether the man even owned the property, she called round and spoke to the people living there – tenants who had only just renewed their rental agreement and who confirmed that the landlord was someone else entirely.

Many people are not so fortunate. Action Fraud recently warned that in the four years to March 2018 it received 18,645 reports of rental fraud, with victims losing an average of £1,396 each.

Rental fraud happens when would-be tenants are tricked into paying a fee to rent a property when in fact the property doesn’t exist, doesn’t belong to the person advertising it, or even has been rented out to multiple victims at once.

Those who fall for it often pay an upfront fee or maybe even their deposit and rent, leaving them unable to afford to put down a deposit on a genuine property.

Numbers from Action Fraud don’t make the issue sound vast, but that is just the number of people who reported their loss to the national fraud and cyber-crime reporting centre. The Annual Fraud Indicator places the annual cost of private rental property fraud at an estimated £918m, an increase compared to the £769m figure in its previous report.

There’s some evidence that it’s not just would-be renters who face this kind of fraud. Mark Brayfield, lettings manager at Lincolnshire’s Pygott & Crone, says he’s seeing a rise in house sale fraud: “As letting agents, we are hearing more examples of tenants trying to sell rented homes with the transaction money going abroad. This type of crime – and cybercrime – will only increase due to the movement of tenants and ease of providing incorrect previous addresses.

“The tenant could go as far as changing their identification to the landlord’s name and allowing them to sell the rented property. Having identification in the landlord’s name would not potentially show as a risk to the agent or solicitor when selling the property and all correspondence would be sent to the selling address.”

The director of Action Fraud, Pauline Smith, says that it’s not just people renting a house or flat to live in that are at risk, but students looking for rooms, and holidaymakers too.

She urges: “Whether you’re booking a well-earned holiday or looking to secure university accommodation, it’s important to be wary of devious fraudsters who are looking to take your money.

“The impact of rental fraud can be severe, both emotionally and financially. By taking simple steps such as visiting the property you intend to rent or checking that the owner is on an approved accommodation list, you will be able to protect yourself from this type of fraud.”

What made Rachael vulnerable was her desperation to secure a home in a particular area and price bracket – such homes are in short supply. Danny Zane, chair of the Association of Independent Inventory Clerks, says it’s partly the short supply of homes to rent that make renters easy prey for fraudsters.

People know they have to move fast to secure a popular property and this leaves them at risk.

“Unfortunately, due to high competition for rental homes – particularly in the UK’s major cities – tenants are becoming increasingly susceptible to rental fraud,” he says. “Many renters find themselves in desperate need of a home in a market with limited stock, high prices and ever-increasing demand.

“Fraudsters prey on prospective tenants’ short-term need to find somewhere to live and it is exploitation of this vulnerability that is the root cause of the problem.

“On top of this, technological advancements and renters’ propensity to carry out large parts of their rental search online, means it is much easier for criminals to present bogus opportunities as genuine.”

Alexandra Morris, managing director at online letting agent MakeUrMove, adds: “In the current market, tenants are struggling to find an appropriate property at their price point and within their timeframe. Rental fraud thrives in these desperate conditions as tenants are more willing to let their guard down and fail to ask the relevant questions for fear of losing out on a would-be deal.

“Fraudulent advertisements are usually very local or on classified sites which don’t carry out appropriate checks on the parties placing the adverts. They particularly appeal to tenants in vulnerable or desperate situations as they are often priced very competitively.

“The price of an advert should be the first warning sign, the old adage ‘too good to be true’ applies, if you know what property generally rents for in an area, ask yourself why would anyone advertise below the market value?”

The good news is that there are several ways to stay safe from suspect ‘landlords’. Action Fraud recommends never paying any money until you have visited the property yourself, rather than relying on photos.

It also urges would-be renters not to feel pressured into transferring large sums of money and to check for accreditation membership such as National Approved Letting Scheme (NALS), Royal Institution of Chartered Surveyors (RICS) or Association of Residential Letting Agents (ARLA).

Charlotte Collins, director at Birmingham-based firm Realty Law, says it’s a good idea to avoid casual adverts in classifieds or social media: “Always visit a reputable estate agent or letting agent. If an advert appears to be placed by a known letting agency, check the email address and call the agency to check that the advert is genuine.

“Never send any funds to anyone prior to viewing the property. A reputable agent will never make such a request. Avoid 070 numbers, they are not area specific. Visit the property first and ask for the landlord’s ID and the gas and electric certificates. Finally, beware of wiring any funds to a lesser known financial institution.”

Frustratingly, the steps required to stay safe from fraudsters can mean missing out on genuine properties. As changes in tax rules have narrowed the profit margins for landlords, many have turned to managing their own properties to keep costs down, and not all have membership of landlord organisations. That means it’s not always possible to check their letting agent is genuine or that they have accreditation.

In those cases tenants need to remain aware of the standard fraud advice: don’t feel pressured to act and do your homework by checking references and reviews. Above all else, if it looks too good to be true then it probably is.