Value of fraudulent tenant applications rose 263% in Q1 2021

Tenant due diligence and guarantee firm Homeppl was able to identify a staggering 263% increase in the value of fraudulent tenant applications in just three months, meaning it was able to protect its clients from more than £800,000 in losses as a result of taking on fraudulent tenants.

The 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. Agents have had to be on high alert, with Homeppl’s data uncovering the true scale of recent fraud. In the first quarter of this year alone, 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 higher than the values from Q4 last year.

Alexander Siedes, CEO and Founder of Homeppl, explains: “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. 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. Due to the location, a lot of this was professional fraud – when 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.”

Amateur fraud on the rise due to COVID-19 pandemic

While professional fraud remains prevalent, the fraud that has seen the biggest rise recently is amateur fraud, in the most part as a result of the pandemic.

Siedes said: “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.

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.

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.”