Pandemic pushes tenant fraud up 263%

The value of fraudulent tenant applications rose by a staggering 263% in just three months, according to the latest data from tenant due diligence and guarantee firm…

In the first three months of 2021, Homeppl’s unique fraud detection tests identified that 2% of all tenant applications were fraudulent, with the value of these applications reaching three and a half times the value of those in Q4 of 2020, which was already up 26% on Q3 – mainly driven by a rise in amateur fraud as a result of the pandemic.  

Alexander Siedes, CEO and Founder of Homeppl, explains: “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 tenants being on furlough or losing their jobs.” 

Siedes says common techniques used by amateur fraudsters are fake IDs, including passports and driving licences, and doctored documentation such as payslips, bank statements, letters of employment, proof of address and proof of study, as well as fake email and websites to mimic employers and references. 

Siedes adds: “This recent rise in fraudulent tenant activity has been severely impacting real estate agents and landlords, presenting significant financial risks where, for example, long-term periods of rent are unpaid or the property is damaged.” 

Another type of fraud that has remained prevalent throughout is professional fraud, which is where the tenant is attempting to take possession of a high value property and sublet it through short lets sites such as Airbnb to maximise income whilst defaulting on the rent to the landlord, and it is more prolific in certain areas.  

“One in 50 of all tenant applications we handled in Q1 2021 was fraudulent. But this was even more prevalent for particular clients as a result of the areas they work in and their client demographic,” explains Siedes. For one of our London-based clients, where there are high value properties and a broad tenant demographic, one in 20 of all tenant applications were fraudulent.” 

Homeppl’s unique technology identifies these techniques and not only prevents fraud, but also enables legitimate tenants from all around the world to rent properties in the UK on fair terms, including students, self-employed, and internationals. In Q1 alone, Homeppl has protected its clients from more than £800,000 in losses. 

Siedes concludes: “We leverage Open Banking, unique fraud detection tests and behavioural analysis, as well as proprietary rent, income, and financial algorithms in every single tenant check, enabling us to approve more tenants and detect more fraudulent transactions than our competitors.”  

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