Lettings fraud is an increasing concern for landlords in London, with recent cases highlighting the devastating effects of rogue agencies and fraudulent tenants. From illegal subletting to properties being used for criminal activities, landlords need to stay vigilant to protect their investments. In this blog, we explore the most common types of lettings fraud and provide actionable steps to mitigate risks effectively.
Understanding Lettings Fraud
Lettings fraud can take several forms, including:
Fake Letting Agents: Scammers pose as legitimate agents, take deposits and rent payments from tenants, and then disappear without providing access to the property.
Illegal Subletting: A tenant sublets the property without the landlord’s permission, sometimes to multiple occupants, leading to overcrowding and property damage.
Rental Scams: Fraudsters use fake identities and forged documents to secure tenancies, then default on rent payments or use the property for illegal purposes, such as cannabis farms.
Deposit Fraud: Unscrupulous agents collect deposits but fail to secure them in a government-backed deposit protection scheme, leaving tenants and landlords in legal disputes.
Warning Signs of Lettings Fraud
Recognising red flags can help landlords avoid fraudulent dealings. Key warning signs include:
Unregistered Letting Agents: Always check if an agency is registered with a recognized body, such as ARLA Propertymark or The Property Ombudsman.
Rushed Applications: If a tenant is eager to move in quickly without proper referencing, it may indicate fraud.
Incomplete or Suspicious Documents: Fake references, forged payslips, and false employer contacts are common tactics used by fraudulent tenants.
Unusual Payment Requests: Be cautious if an agent or tenant insists on cash payments or wire transfers instead of traditional banking methods.
Steps to Protect Your Property
To safeguard your rental property from fraud, consider the following precautions:
1. Work with a Reputable Letting Agent
Using a trusted and accredited estate agent can significantly reduce your exposure to fraud. Verify their credentials with:
ARLA Propertymark
The National Approved Lettings Scheme (NALS)
The Property Ombudsman
SafeAgent
2. Conduct Thorough Tenant Screening
A rigorous tenant vetting process is crucial. Ensure you:
Request government-issued photo identification (passport, driver’s license, or visa for non-UK residents).
Verify proof of income (pay slips, employment contracts, or tax returns for self-employed tenants).
Contact previous landlords for references.
Conduct credit checks to assess financial stability.
3. Regular Property Inspections
Schedule periodic inspections to ensure tenants are complying with the lease agreement. Look for signs of illegal subletting, unauthorised occupants, or property misuse. If you cannot inspect personally, hire a professional property management service to conduct checks on your behalf.
4. Secure the Tenancy Deposit Properly
By law, all tenancy deposits must be placed in one of three government-backed schemes:
Deposit Protection Service (DPS)
MyDeposits
Tenancy Deposit Scheme (TDS)
Ensuring compliance protects both landlords and tenants from disputes over deposits.
5. Use Legally Binding Contracts
A well-drafted tenancy agreement should outline:
Subletting restrictions
The tenant’s responsibilities
The right to conduct inspections
A requirement for tenants to notify landlords of any changes in occupancy
Having a solicitor review your contract ensures legal compliance and helps prevent loopholes that fraudsters may exploit.
6. Be Wary of Cash-Only Transactions
Insist on rent payments through secure banking channels. Cash payments or money transfer requests can indicate fraudulent activity.
7. Monitor Utility Bills
Sudden increases in electricity usage could be a sign that the property is being misused (e.g., as a cannabis farm). Staying informed about utility consumption helps detect illicit activities early.
What to Do If You Fall Victim to Lettings Fraud
Despite taking precautions, some landlords may still encounter fraud. If you suspect foul play, take these immediate steps:
Report to the Authorities: Notify local police and Action Fraud UK.
Seek Legal Advice: A solicitor specialising in property law can guide you on eviction proceedings or compensation claims.
Alert the Letting Community: Inform property forums and landlord networks to prevent others from falling into similar traps.
Strengthen Future Screening Measures: Learn from the experience and tighten your vetting procedures to prevent recurrence.
