"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"
- Andy Halstead - HomeLet
The surge in fraudulent applications is not solely attributed to criminal behaviour but is exacerbated by market conditions:
Landlords are selling houses at record speeds because of rapidly increasing interest rates and stringent government policies. The resulting shortage in supply of rental housing is causing fierce competition for properties - data shows over 20 applicants per rental. Consequently, driving rental prices to record highs. When coupled with the cost-of-living crisis, it is a dire situation for all involved in the industry.
Consequently, fraudulent activity is not only increasing through 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.
Types of fraud
HomeLet's data reveals a fourfold increase in fraudulent applications over the past two years.
In parallel, with the rise of artificial intelligence and other software, fraud within the lettings industry has become more strategic, complex, and targeted. Making it a difficult time for landlords, letting agents and honest tenants.
The most common fraudulent document received by HomeLet involves edited bank statements, primarily for income inflation, mimicking employment, or concealing illegal income sources. Notably, 89% of failed applications in January 2024 were declined due to fraudulent bank statements.
In 2023, London, the Southeast, East of England, and Wales took the lead in fraudulent activities.
So far this year, HomeLet has prevented landlords and letting agents from losing over £1.4m in average rent because of fraudulent applications, building on the £47 million the company has helped customers save in 2023.
Tackling the issue
To help combat fraud, and improve the market conditions for all involved, HomeLet is launching VISTA, a revolutionary tenant referencing solution designed to detect and prevent fraudulent activities within the lettings industry and conduct fairer, more accurate affordability assessments.
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 today's and tomorrow's market.
"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 of 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, adds: “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."
