Document-based referencing is dead.
Why?
Because tenancy fraud is no longer just a forged payslip here or an altered bank statement there.
We’re contending with entirely synthetic identities that appear genuine all the way through from financial information to employer references.
And the truth is, the sector has been caught off guard.
Landlords are rightly unhappy. While 36% rank tenant referencing as their number one priority when selecting an agent, 48% also say it’s a top frustration.
The good news is that tech is available to help turn the tide. By combining independently verifiable data, the know-how of on-the-ground agents, and modern referencing technology, agencies can defend against fraudsters.
In this guide, we'll explain how modern tenancy fraud works, why traditional document-based referencing is no longer enough, and the practical counter-fraud steps your agency can take to strengthen its referencing process and reduce risk to landlords.
Simply put, tenancy fraud is when a tenant knowingly provides false or misleading information in their application to secure a rental property. A successful fraudulent applicant may use relatively simple techniques, such as forging documents, to more complex methods, such as impersonating a different person entirely.
Fraud can take many forms, but some of the most common examples include:
As these tactics become more sophisticated, agents must take a closer look at unverified documents. After all, sophisticated fraud needs a sophisticated defence. You can no longer rely on an eye-test or a hunch; you need a referencing provider built to recognise fraud.
*Identities created via forged documents specifically for fraud
Tenancy referencing processes are designed to verify that a prospective tenant is who they say they are, can afford the property, and has provided accurate information about their circumstances. As we've already mentioned, the traditional way of doing this involves reviewing physical documents (or at least scans of them) alongside credit and affordability checks.
| Traditional tenant referencing | Modern tenant referencing |
| Relies on tenant-supplied payslips and bank statements | Verifies income and employment via direct integrations with Open Banking, HMRC, and payroll providers |
| Reviews documents visually to assess whether or not they’re genuine | Uses automated processes and dedicated referencing providers to confirm |
| Carries out each check individually | Treats each check as part of a greater whole |
| Assumes supporting documents are accurate unless something looks suspicious | Assumes every claim should be independently verified before it's trusted |
| Focuses on detecting fake documents | Focuses on making fraud difficult to commit in the first place |
| Risk: HIGH | Risk: LOW |
Fraud can strike at almost every stage of an application. This means referencing providers can’t stop at one or two checks. We've broken these stages down here:
The first step of any investigation is to ensure that the tenant is who they say they are.
This typically involves checking photographic identification, verifying their address history, and checking that their personal details (name, date of birth, etc.) are consistent across the housing application. If there’s something off about the applicant's information, the referencing process will usually stop here.
Many agents still rely on an “eye test” to verify documents. At first glance, fake documents created with modern techniques can be incredibly convincing. Using technology like Identity Document Validation Technology (IDVT) dramatically reduces this risk by digitally verifying a tenant's right to rent.
Employment and income are two of the most important parts of tenant referencing.
Traditionally, agents check payslips, bank statements, and employer references. While using these documents remains an important part of the process, advances in image-editing software and AI tools have made it easier than ever to produce convincing fakes.
To avoid letting to fraudsters, you should use tech-powered referencing services that take proactive steps to counteract these techniques.
For example, Goodlord uses Trusted Sources to verify income and confirm employment (we cover more about it in "Why trusted data sources are the strongest defence against tenancy fraud" below).
It's important to remember that income and affordability are two different things. This means agents need to check different sources when investigating them.
While income focuses on how much money the tenant has coming in, affordability checks focus on earnings, existing financial obligations, and credit ratings. Trusted Sources can also help ascertain that everything is above board.
Affordability checks can also stray into territory agents need to handle carefully. Previously, these checks may have considered whether the tenant was the recipient of Universal Credit or a similar government benefit. Under the Renters' Rights Act, it is considered housing discrimination to deny a property to a tenant just because they receive benefits.
No single check is designed to identify fraud on its own. Instead, the referencing platform you use should take all of the above checks and compare them.
A genuine application should tell a consistent story about the tenant and their circumstances. Each separate piece of information in an application should build a full, legitimate picture.
An employer's details, a referee's email address, and any information about a previous landlord could be easily falsified. If the information the applicant has given hasn't been independently verified, it can't be trusted.
Even if all the information matches, there's a risk that multiple bad actors could collaborate to create synthetic identities. Referencing services should always check and check again using Trusted Sources.
It's clear now that traditional referencing processes are increasingly insufficient in the face of increasingly sophisticated fraudsters. That's why Goodlord requires all references that pass through its system to use Trusted Sources to verify all applicants.
In simple terms, Trusted Sources is a bundle of leading-edge technologies that help referencing service providers better assess prospective tenants. These sources can vary by provider, but on the Goodlord platform, they include Open Banking, HMRC connections, and the tenant’s payroll provider.
These sources build a more reliable profile of the prospective tenants, and allow in-depth verification that makes it incredibly difficult for fraudsters to slip by.
Upcoming data from Goodlord will show that this is already changing how fraudsters behave. Since Trusted Sources has been implemented on our platform, applicants flagged for potential fraud have been less likely to connect to Trusted Sources than genuine applicants. This means agents can spot potential risks more quickly and close potentially fraudulent applications.
Trusted Sources helps to combat fraud in two key ways:
Rather than relying on bank statements provided by the tenant themselves, Open Banking securely connects directly to the applicant's bank. This data gives us a much clearer view of the applicant's affordability and income while also reducing the risk of a forged document slipping through the cracks.
Upcoming data from Goodlord will also show that employment fraud is one of the fastest-growing forms of tenancy fraud, making independent verification increasingly important. Trusted sources use payroll integrations and HMRC data to confirm that the applicant is employed where they say they are.
What’s clear is that fraudsters are no longer relying on the occasional forged payslip or edited bank statement. They're exploiting the limitations of traditional, document-based referencing processes that depend heavily on information supplied by the applicant.
That means agents can no longer rely on documents only looking genuine. Every piece of information they receive needs to be independently verified.
The most effective defence is building a referencing process that combines trusted data sources, automated verification, and experienced agent judgement to create multiple points of verification. That makes it significantly harder for fraudsters to slip through the cracks.
At Goodlord, Trusted Sources help agents move beyond document-based referencing by verifying identity, income, and employment through independent data wherever possible.
Ready to strengthen your referencing process? Get in touch with our team.