How to avoid tenancy fraud before the tenant goes through referencing

Referencing fraud is becoming a major worry for letting agents and landlords. According to Goodlord and Vouch’s State of the Lettings Industry report, two-thirds of letting agents are actively worried about the impact of tenant referencing fraud.

If possible, letting agents should make sure to use a provider that can catch fraudulent applications. However,  there are still steps that your agency can take to catch and avoid fraudulent activity before the tenant even goes through referencing.

1. Carefully check the ID of your applicant
2. Ask your applicant pre-qualification questions to spot any unusual trends
3. Raise any concerns with your referencing provider

1. Carefully check the tenant’s ID 

Whether or not you need to complete the Right to Rent checks - a legal requirement in England - checking the identity of your applicants is a key step in the referencing process. If ever you are verifying a tenant in person, you should make sure that the picture in their ID matches the person standing in front of you. 

Fraudulent documents are also not always easy to spot, but letting agents can always double-check on the government's site whether the fonts and colours match the official list of documents 

If your tenant does go through referencing - whether through your agency or a provider, such as Goodlord - the provider will often use technology tools, such as facial recognition to match photos of applicants to the photo on their ID when undertaking the checks.

Referencing provider Vouch uses Government-approved AI technology such as Identity Document Validation Technology (IDVT), to help agents complete Right to Rent checks online. This technology also minimises the element of human error, making referencing even more secure.

2. Ask your applicant pre-qualification questions to spot any unusual trends

Pre-qualifying your tenants is key to combating fraud. Letting agents should ask the following questions and listen to their answers to work out whether a tenant is right for a property:

• How much does the tenant earn?
• What's their job?
• How do they wish to pay their deposit?

If a tenant claims to be earning an unusually large amount for their job, it might be worth investigating this further. 

You should also monitor the demeanour of the prospective tenant. Note the following red flags that something could be off:

• Are they excessively impatient during referencing?
• Is there a lack of responsiveness to the requests for information?
• Are they very keen to avoid open banking?
• Do they keep changing their responses?

Remember to go with your gut. Doing a bit more investigation will help you in the long-run, and will be better for your landlords. 

3. Raise any concerns with your referencing provider

If you have any concerns, it's always worth mentioning them to your referencing provider before you go through the tenant referencing process.

For example, fraudsters sometimes make multiple applications in the hope that one of them is accepted. This could mean that, if they're caught once, they may make the same mistakes again. 

Goodlord’s Pro reference, for example, is integrated with National Fraud Database to see whether the tenant has conducted fraudulent behaviour before anywhere else across the UK. 

As much as the technology used by suppliers can help to speed along the referencing process, a human is always involved to add that extra layer of protection, and they'll be able to take on board any suspicions you may have.

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