Goodlord analysed a sample size of over 300,000 tenancy applications submitted by people looking to rent homes in 2022. Whilst only a tiny fraction - just 1 in 1,000 - of these applications were proved to be fraudulent, 54% of those proven to be false involved payslip fraud.
According to Blake Richmond, Managing Director of Referencing at Goodlord, there are lots of ways people try to cheat the process when it comes to pay slips. He comments:
“As the technology fraudsters use gets smarter, agents should ensure they’re deploying the best-in-class tech tools to combat it.
The use of Open Banking, AI-based ID tools, and credit referencing software are incredibly effective at picking up this kind of fraud. Likewise, it’s essential that agents and landlords look out for red flags in tenant behaviour.
These include refusing to cooperate with Open Banking requests or, when it comes to the pay slips, using the wrong tax codes, missing out key sections, or forgetting to add NET/Gross pay. Having the right systems in place and an eagle eye on the details is vital to spot fraudulent applications quickly and accurately."
When renting a property, prospective tenants must provide accurate details around their employment status and income, so that letting agents and landlords can ensure they will be able to afford the rent over the course of the contract.
Those who might not be able to afford it may be asked to provide a guarantor, a trend which is also on the rise. According to a Goodlord analysis in November 2022, just under 15% of renters required a guarantor, up from less than 12% at the same time in 2021.
This reflects the rising cost for rental homes in England. Goodlord’s latest monthly Rental Index showed that the average cost for a property in England was £1,076.43 per month in January 2023 - up 8% compared to prices in January 2022.
Tom Goodman, Managing Director of fellow RentTech platform Vouch, which also process thousands of tenancies each month, adds:
“We’ve definitely seen an increase in the number of fraudulent tenancies being picked up, as well as a rise in the creative means people are using to try and hoodwink the referencing process.
A tech-led approach is the only way to ensure you’re spotting these dodgy applications. Too many providers are behind the curve on this and need to rapidly step up their defences. Agents and landlords can no longer rely on instinct or document review - sophisticated frauds require even more sophisticated tools to combat them.”