Without a secure process for tenant referencing, letting agents can face significant risks. Find out how technology can minimise these vulnerabilities.
From fraudulent applications to potential civil penalties, letting agents face various risks if they don’t have failsafe precautions in place. Embracing the right technology allows agents to feel confident during the tenancy process, while streamlining their entire approach to referencing.
With tools such as open banking and identity document validation technology (IDVT), letting agents can confidently ensure that tenants are who they claim to be and the right fit for their landlord’s property.
But what are the specific risks letting agents face during referencing, and how can they be minimised?
Read our guide to find out more:
- Which parts of the process will put letting agents most at risk?
- Slowing down referencing applications
- Vulnerable to advances in technology
- Risk of penalties with non-compliant Right to Rent checks
Which parts of the referencing process will put letting agents most at risk?
Traditionally, documents such as payslips and bank statements have been used to verify a tenant’s income during the referencing process. However, this reliance on documents can expose letting agents to fraudulent applications.
Research by Goodlord earlier this year revealed that the number of fraudulent applications during the referencing process rose to 2.9 cases per 1,000—a 140% increase.
These fraudulent applications often involve tenants tampering with or exaggerating their income or claiming employment with non-existent companies, which could impact both a landlord's and an agent’s financial interests.
While some pre-tenancy platforms assist letting agents by checking documents, the increasing sophistication of AI means that doctored documents are becoming more advanced and difficult to detect.
To minimise fraud and reduce reliance on document verification, Goodlord PRO goes straight to the source. Information required for a reference is verified directly with HMRC and payroll providers. By using a tenant's National Insurance number, Goodlord eliminates the risk of falsified documents. With PRO, letting agents can be confident that the information provided by tenants is genuine.
This added layer of protection allows letting agents to reassure landlords that prospective tenants are who they claim to be.
For even greater security, all applications made through Goodlord PRO are checked against the National Fraud Database.
Slowing down referencing applications
Verifying and processing documents for every reference application can consume a significant amount of a letting agent's time. Agents must not only ensure that all documents are genuine but also assess whether the candidate is suitable for the property.
By reducing the reliance on manual documentation checks, the referencing process becomes more efficient and secure. This allows agents to focus on winning new landlords, rather than getting overwhelmed by administrative tasks.
Platforms like Goodlord can save considerable time by automating the processing of referencing applications; streamlining verification and speeding up tenant move-ins. With Goodlord PRO, 25% of applications can be completed instantly, and 1 in 3 are returned in 24 hours, with thorough checks completed
This integration of smart technology enables letting agents to reassure landlords that they have found the right tenants, while also freeing up more time to pursue new business opportunities.
Vulnerable to advances in technology
With the rise of fraud cases, traditional document checks—like IDs, bank statements, and payslips—are no longer enough. Letting agents are increasingly at risk if they don’t adopt advanced technology to counter these threats.
Manual checks can miss expertly doctored documents, from simple photoshopping to advanced editing tools.
Payslip fraud alone accounts for 58% of all fraud cases during referencing. If these slip through, it could cost an agent up to £10,000 in lost lifetime landlord value.
To stay ahead, agents should find solutions that verify tenant information, especially payroll and income, directly from the source, reducing the risk of fraud and ensuring more secure references.
Working with a supplier who leverages tools such as open banking and integrations with trusted sources such as payroll providers and HMRC means you can verify income directly at source. Goodlord’s PRO referencing ensures that only necessary information is used for an application - making the use of documents unnecessary during referencing.
Find out how Goodlord integrates with HMRC and payroll providers in this info sheet
Risk of penalties with non-compliant Right to Rent checks
The stakes are high for letting agents conducting Right to Rent checks. Mistakes or non-compliant checks can lead to hefty fines of up to £20,000 or even a five-year prison sentence if an agent knowingly overlooks a tenant’s status.
Accurate and timely checks are essential to avoid these severe penalties. Streamlining the process ensures compliance and reduces stress, allowing agents to confidently complete references.
Additionally, letting agents must be able to prove that a Right to Rent check has been conducted. Failure to do so could result in a civil penalty.
Goodlord's referencing team reduces the time spent on Right to Rent checks. By simply providing a prospective tenant's share code and date of birth, letting agents can let Goodlord handle the document collection process to save time and ensure you’ve got everything you need to complete a check.
