Scammers ‘making millions’ off desperate renters

Estimates show some 250,000 renters have fallen victim to rental fraud and scams in the past five years – almost 50,000 in the past year alone.

Fraud

With more and more tenants seeking out private landlords online and cutting out the traditional letting agent, scammers and bogus landlords have been making millions by targeting desperate renters.

These scammers pose as landlords and post fake adverts on classified ad sites and other free-to-list platforms, then attempt to convince potential tenants to transfer a holding deposit or up-front fee – (often over £1,000) to secure the property without ever having seen it in person.

New YouGov research from TheHouseShop.com shows that consumers are becoming more aware of the dangers and are now demanding better security checks on the platforms they use to search for property online.

Recent estimates from Shelter show that as many as 250,000 renters have fallen victim to rental fraud and scams in the past five years – almost 50,000 victims in the past 12 months alone.

It is estimated that bogus landlords are making £775m through rental scams, with an average cost per victim of roughly £2,400, showing the scale of the damage caused by scammers.

As landlords’ profits are squeezed by government-imposed tax relief cuts, stamp duty surcharges and a potential increase in letting agency costs as a result of the tenant fees ban – more and more private landlords are turning to DIY online platforms to find tenants for their properties.

However, many of the classified ad sites commonly used by such landlords offer little to no security checks to verify the authenticity of adverts.

These sites have therefore become favourite targets for scammers looking to secure up-front payments from tenants for properties that they either do not own, or that never existed to begin with.

Online security and fraud prevention is becoming an increasingly important concern for safety-conscious home-hunters, especially for the thousands of tenants looking for private landlord properties that they will not find on the big ‘agent-only’ portals.

Through its commissioned research TheHouseShop.com found that a majority would be ‘more likely’ to use a property website that runs a variety of checks to verify the identity of advertisers and confirm property ownership details.

Older age groups were the most cautious when it came to fraud prevention and online security, with 24% of 45-54 year olds and 29% of over 55s saying they are ‘much more likely’ to use a property site with additional security checks.

Forcing landlords to provide evidence that they are the legal owner of a property before allowing them to post an advert is one of the best ways to deter bogus landlords, but many in the industry admit that even with the most sophisticated security checks available, it is almost impossible to stop 100% of scam or fraud attempts.

TheHouseShop has become first business in Europe to offer a property ownership verification system for all private advertisers when they installed their Land Registry database check last year.

Nick Marr, co-founder, said:It’s been almost a year since we launched our mandatory Land Registry ownership verification check and we have now built up thousands of verified private rental listings on the site.

“We are finding that more and more of our traffic is coming from tenants using Google to track down private landlords, and being able to provide a safe and secure platform for renters to engage with landlords directly has been a huge achievement for us.”

“Our recent YouGov research has proved that home-hunters are becoming increasingly concerned about online safety and security, and these concerns are impacting which sites they choose to use.

“With the majority of Brits saying they would be either ‘more likely’ or ‘much more likely’ to use a site that verifies advertisers’ identities and confirms property ownership, it is clear that consumers are wising up to the dangers of online rental fraud and demanding tougher security checks on the platforms they use to search for property.”

 

CASE STUDY: A close escape

Annie Stanford, an account manager from London, almost fell victim to an online rental scam while looking for a property late last year.

Annie explains how the scam unfolded and how the experience has changed her attitude to online safety and security:

“While looking for a new flat to rent late last year, I stumbled across a property on a classified ad site that was absolutely perfect for what I needed at the time and was actually within my relatively small budget.

“After a few messages back and forth with the landlord, I was told that multiple other tenants were interested in the property and that unfortunately as the landlord was out of the country at the moment, I probably wouldn’t be able to view the place in person.

“The landlord turned on the pressure by claiming another tenant was willing to put down a deposit by the end of the day and encouraged me to transfer a holding deposit of two weeks’ rent, with the promise that he would take the property off the market and meet me at the property in a couple of weeks’ time to hand over keys and sign contracts.

“Alarm bells started ringing when he asked for the transfer to be made via Western Union and when the details he provided for the transfer didn’t match the name he had been using to advertise the property.

“I decided to investigate before taking it any further and I quickly found an almost identical property on a local estate agent’s website from six months earlier with the exact same images.

“The estate agent’s listing showed that the property had been let already.

“I then googled the ‘landlord’ name and email address and found multiple posts on scam forums claiming that this guy was a total fake and had been posting ads for properties that he didn’t own or have the right to let out to tenants.

“Thankfully I took notice of the red flags and ceased all communication with the landlord – but I came so close to losing almost £1,000 of my hard earned cash.

“I imagine there are thousands of tenants out there who have had very similar experiences and I would strongly suggest that anyone looking for property online makes sure that they do their research and avoid sites that don’t run proper security checks on the people posting property ads.”

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