Lettings Fraud in London is at an all time high – how do I protect myself

What’s the point of referencing tenants in London?

Because lettings fraud in London is at an all-time high.

Do I need to reference tenants?

Let’s look at some real life Benham and Reeves referencing statistics to see what we encounter every month

• 8 forged passports or fake ID
• 40 digitally altered bank statements, utility bills, payslips or proof of address
• 50 forged employment references
• 30 undeclared county court judgements (CCJs) and individual voluntary arrangements (IVAs)

These are absolutely true but shocking statistics which would frighten any landlord or investor. Bear in mind these are only for Benham and Reeves, just imagine the volume of such cases across London and the UK when extrapolated across the capital.

In London’s competitive rental market, landlords are often put under pressure to act fast to secure a tenant. But speed and attention lead to huge issues both emotionally and financially for the landlord.

These statistics reveal a harsh truth that tenant fraud is a widespread issue and landlords must be on guard. Consider the very high value of a London property. Unfortunately this attracts crooks and chancers who want to take a property and either live there for free or worse still carry out criminal activities in the property. So if you or your agency fails to take tenant referencing seriously then the landlord risks not only nightmare tenants but significant financial and legal problems.

Is digital screening enough?

As technology evolves, fraudsters evolve with it and become more innovative and inventive in finding ways to trick the system. Whilst digital and AI technology are amazing in their ability to process vast amounts of data quickly nonetheless human intelligence and ingenuity should NEVER be written off as there are plenty of savvy criminals who know how to game the system. A balance of digital and manual scrutiny is the only way to protect yourself from a costly situations.

At Benham and Reeves, we would rather not allow a tenant move into a property even though we miss out on commission as we know the pain a bad tenant causes a landlord. We have many cases where we fail a tenant who then goes on to rent successfully through another agency and in some cases the same property – and it so often ends with pain for the Landlord.

Our referencing is very stringent and our team goes the extra mile to verify every aspect of a tenant’s life

1. Strict digital ID verification All applicants must provide a photo ID (passport) and proof of address to ensure authenticity.

2. Digital checks of IDs and against CCJs or IVAs.

3. Physical checks by real human beings of all documents

4. Speak to past landlords (not just the current one) To gain honest and unbiased feedback. Current landlords, if they have a bad tenant who they want to get rid of will often not provide a truthful reference.

5. Employment reference Rigorous checks of employment references we look at domain names, registration dates, IP addresses, etc, and cross-reference these details with payslips, bank statements.

6. Bank statements Three (or even six months) bank statements are checked by a human to ensure they are genuine.

7. LinkedIn profiles Checked to reveal potential threats and troublemakers. For instance, a fake company might have a recently registered domain name or an IP address located in a different country than where the business is reported to be based. This is a red flag, and when cross-referenced with other information, can indicate a fraudulent application.

8. Google search Google search of an applicant can flag up items not listed in other documents like ongoing court cases.

9. Open-source tools The use of several open-source tools and search engines has uncovered numerous fraudulent applicants that other companies might miss.

10. Information sharing with police A good tenant doesn’t suddenly decide to go rogue or pick a career in crime out of the blue. Most devious tenants have a pattern and a plan for executing their deception. Access to police records can help identify dubious individuals, and our agency regularly shares intelligence with the Metropolitan Police and National Crime Agency.

11. Local checks and guarantors Local checks and the involvement of guarantors are essential, especially if a landlord plans to let their property to an overseas tenant base, such as students and corporate professionals backed by their well-paying multinational employers. Our agency will not approve any references based on overseas savings, as landlords would have no legal recourse to recover rent from foreign funds. Similarly, guarantors must be UK property owners, ensuring that landlords have a viable legal option if tenants default on their rent.

Doesn’t every agent carry out the same checks to protect landlords?

Not all letting agents are the same!

Estate agents vary widely on requirements for new tenants – some carry out very light referencing and some use referencing companies (and reference companies themselves vary greatly in the checks they actually carry out) – landlords need to understand what measures your estate agent or their referencing company is taking.

The accuracy and efficiency of full and indepth referencing comes down to the methods deployed to protect clients and ensure landlords have a smooth, successful and stress-free tenancy.

Examples of how good referencing can save the day

Thorough tenant referencing isn’t just about peace of mind; it’s about preventing real financial loss and legal headaches.

Here are some examples of how stringent checks have saved our clients from potential fraud and eventual losses

1. High net worth fraud A supposed art dealer with an undisclosed CCJ of £12,151 provided altered bank statements and was found to be in arrears at an undisclosed tenancy while claiming Universal Credit. Without careful cross-referencing, this fraudster could have easily slipped through the cracks.

2. Organised crime network Several applications from different agents (different tenants or agents?) shared suspicious similarities, such as identical email formats and switched referees. All references were found to be fraudulent, leading to police involvement. This case highlighted the importance of scrutinising not just individual applications but patterns across multiple ones.

3. Cloned company scam Multiple applications were made by employees of a fake media company. Altered bank statements, fake payslips, and undisclosed addresses linked these applicants to a newly formed lettings business likely involved in illegal activities. The discovery of these links prevented a potentially large-scale fraud.

4. Fraudulent barrister A barrister applied with what appeared to be legitimate documents. However, closer inspection revealed altered bank statements and a gambling addiction. The applicant had also provided fake landlord details to hide arrears at their current tenancy. This case underscores the importance of not taking professional status at face value and digging deeper.

The most important first line of defence against a nightmare tenant is referencing. If it’s done wrong or misses things then the pain that can ensue for a landlord is enormous.

Can an agent’s referencing really make a difference?

Yes. At Benham and Reeves, we take this responsibility incredibly seriously, conducting thorough checks on all applicants, regardless of their claimed status. By deploying a blend of digital tools and manual scrutiny, with very rigorous vetting, we greatly reduce the risk of financial loss and legal hassle.

In an era where fraud is increasingly sophisticated, landlords cannot afford to cut corners on tenant referencing.