There has been a notable increase in the number of tenants lying about their incomes with a view to deceiving letting agents, and ultimately landlords, into believing that they can afford higher rents, according to Goodlord.
Amid a chronic shortage of housing, the tenant referencing agency has warned of a rise of fraudulent tenancy applications, as renters attempt to outbid one another.
A sample of more than 300,000 tenancy applications made in 2022 and analysed by the firm found one in 1,000 were fraudulent, of which more than half – 54% – involved payslip fraud.
EYE has asked Goodlord for comparable data.
Fraudulent applications leave landlords at risk of rent voids – and potentially agents without commission – if a tenant cannot afford to pay their rent.
The fraud uncovered by the referencing firm could potentially be the start of a growing trend as renters struggle with rising costs.
Tenants are typically required to provide at least three months’ of payslips or bank statements as proof they can afford rent, before they are able to secure a property.
Blake Richmond of Goodlord said: “We have definitely seen a rise in people trying all sorts of things in an attempt to fool our referencing systems.
“Technology improvements have made it easier for the average amateur to fake or photoshop documents. They can use apps at home or outsource it to a company online – overall people are getting a lot better at faking them,” he added.
But tenants lying about their income often tripped themselves up with small mistakes, according to Richmond.
In a recent case, he revealed that a prospective tenant had faked their bank statement to show an annual income of £50,000 – but showed their hand after including a “Bacs” transfer on Christmas Day, when banks do not process payments.
He added: “Another [case] had doctored their income to show £35,000 a year, but their Universal Credit statement showed they received benefits which didn’t tally with that level of income.
“It’s a growing problem as tenants are competing hard with other renters and want to show landlords they are in the best financial position possible.”
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, MD of fellow RentTech platform Vouch, which also process thousands of tenancies each month, added: “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.
“Agents and landlords can no longer rely on instinct or document review – sophisticated frauds require even more sophisticated tools to combat them,” he added.
Comments (18)
Someone I know is currenty having a very trying time with Goodlord!
Just a Goodlord Advert they must be struggling.
GOODLORD, the biggest hypocrites there are. Following is a review of my experience as a letting agent with Goodlord, which they never responded to and instead took down, so I will be reposting today.
Goodlord passed a tenant to rent through us by taking his word that he was a home owner. He was not a home owner and it turns out had a very checkered history. We would never have let to him if Goodlord had done the due diligence we pay them for. He caused damage to the house and withheld rent. We had to bribe him out in the end as he had been such an awful tenant and had made numerous threats to us and the owner. When he left, obviously he did not get his deposit back, so he came to the office at night and smashed our windows in and our company car windows in. We have him on video but he had a mask on so the police will not pursue it even though we know it was him. The landlady was so traumatised by him as a tenant that she sold the house. We had been letting the house for 15 years before this tenant from Goodlord appeared. The average rent was £800 per month and obviously we have lost any future income. When the tenant left, there was steady stream of debt collection companies after him, which Goodlord would have known if they had done the proper check on him.As you will see below, Goodlord are taking no responsibility for not properly assessing the tenant and taking him at his word.”Further to my email dated 27 January 2022, I have now investigated your complaint fully. It is always our intention to offer the best possible service and I’m sorry that you feel we have failed to meet your expectations at this time.Your complaint as I understand it, is that you are questioning the validity of the reference Goodlord conducted for your applicant,XXXXXX Within your communication with [Name redacted by moderator]. on 27 January 2022 you stated you were unhappy with the following points:
The applicant had listed himself as a homeowner but you are aware that the tenant actually lived with his girlfriend at the time
The tenant has been in prison
You are having many issues with the tenant including rental arrears, damage to the property, damage to your office, and abuse to staff
You are concerned that there may have been other tenants that have passed our checks, that should not have done
I have now completed a full investigation into the concerns that you have raised and explained our response to each point below.The application form was completed by the applicant and in doing so they have agreed to the terms of, and signed, our tenant declaration. This declaration includes a section which states ‘I hereby certify that the information provided is true and accurate’. This is the information we use to complete the referencing checks, and as the applicant listed that they were a homeowner, no further information was requested; this is in accordance with our internal process.In relation to the concerns regarding the applicant having been to prison; we do not conduct background checks on tenants, as this is not part of the Referencing service offered. We would therefore not have been aware of this. To confirm, had this come to light during the checks, this is not something that would have altered the outcome of the report, as our reports are based on Credit, ID, Income and Residential checks, and not a tenants character.I am not able to comment on any other tenants that you may have referenced through us in general, however if you have any specific concerns I am more than happy to investigate these applications for you. In order for me to do so, please provide as much information as possible about these applications, along with your reasons for being concerned.I am sorry to hear that you are facing so many issues with this tenant, and I hope you are able to resolve these quickly. However, having reviewed the application, I am satisfied that our internal process has been followed, and the checks conducted as we would expect. I am therefore unable to uphold your complaint. In accordance with our Complaints Handling Procedure, this is deemed to be our final response and we are unable to take this matter further.Regards[Name redacted ].Head of Compliance
What exactly could Goodlord have done differently?
Credit and reference checked the tenant, asked to see a mortgage statement or deeds, etc. Basically anything other than taking his word for it. So are you saying, based on my email, you would be happy with service I received!!!
Out of interest how much did you pay them for a reference?
I cannot remember, but we did pay as they gave us a report of the future tenant with a pass even though they did nothing to check him. It is their response which really galls me as they just washed their hands of any liability or responsibility, even though everything that followed was because they did no checks on him.
Bill, I am afraid this is what happens when you go looking for a full service solution and have no idea what all the various parts entail.
Its a shame as the theory is a good idea but they clearly are cutting corners to bump profits. We now use Rightmove which so far has been spot on.
Have I said that I disagree with you? I agree that they could have done more but you know the criteria Goodlord use, that’s why you instructed them. Surely you reviewed the final reference report and tried to fill any gaps prior to handing over the keys? I feel for the landlord, very tough situation and unfair.
At no point did Goodlord inform us that they do no checks on people that say they own a house. That is what we paid Goodlord for. When you have loads of move ins going on, you assume when you pay a company like Goodlord, they will have carried out the service you paid them for. Obviously they are just trying to push through applications as fast as possible which means that a lot of bad tenants are slipping through as profits over service rules.
This will sound harsh but I am afraid you are as much to blame as they are. You have a duty to your landlord and to make assumptions on the service that is being provided without finding out exactly what check are and aren’t carried out is just plain wrong.
You said you assumed that they will carry out the service you paid them for, but you have no idea what that service is!
Goodlord is a strange one and they are fairly inconsistent. I like the product but you’re right, sometimes they just throw the reference together and we have to complete further checks. Other times, they ask for everything from a tenant and are extremely strict. Either way, i hope your experience gets better and wish you all the best Bill.
Why are agents using referencing services when it is far easier to do them yourself, Agents have become lazy out sourcing business rather than do the proper job they are employed for by their landlords.
Accountability. My guess, a lot of the upper management in companies using referencing companies don’t want the brunt of it if the tenants are not up to scratch and fall behind on rent. If they outsource the references then they don’t need to be accountable.
I thought for a second reading the headline that there was finally going to be a balanced argument from the media regarding good and bad tenants as well as landlords (as there are good and bad of both), then I read that it is 1 in a 1000 !!!
Goodlord! Who writes this nonsense. 1 in a 1000 during 2022, of which only a half involved what the headline suggests. So the SURGE is up from what? Or don’t they know, is this just another……….
1 in a 1,000, I’d say a lot higher, sadly in this day and age a guarantor is a must, if the applicant can’t find someone to trust them why should I hand them over a property worth hundreds of thousands.