Tenancy fraud is costing landlords hundreds of millions of pounds every month with new research suggesting the scale of the problem is growing as rental affordability pressures rise and eviction timelines remain lengthy.
Figures from LegalforLandlords estimate that fraud across the private rented sector is now costing landlords around £266m per month in unrecovered losses as many victims struggle to regain control of their properties or recover unpaid rent.
The analysis comes as the sector faces tighter regulation, higher rents and longer possession times, all of which increase the financial risk of letting to the wrong tenant.
Survey data shows that around 5% of landlords say they have been victims of tenancy fraud, broadly in line with previous estimates suggesting a similar proportion of rental homes are occupied by tenants who obtained the property dishonestly. With more than 5.5 million privately rented homes in Britain, that figure would equate to over 275,000 properties affected.
MAJOR INCOME LOSS
Based on the current average monthly rent of £1,379, LegalforLandlords estimates that tenancy fraud is costing landlords around £379.8m per month in lost income, with around 70% of victims unable to recover any of the money. That leaves approximately £265.8m disappearing every month – equivalent to more than £3bn a year.
The most common form of fraud is tenants deliberately defaulting on rent, which accounts for around 70% of cases reported by landlords.
This often involves tenants moving into a property with no intention of paying, leaving landlords facing months of arrears while they attempt to regain possession. Previous data from LegalforLandlords shows the average repossession process now takes more than 26 weeks.
Illegal subletting is the second most common scam, affecting around 20% of landlords who have experienced fraud, followed by falsified financial information, fake identities and payment scams involving bounced transfers.
SOPHISTICATED SCAMS
Sim Sekhon (main picture, inset), Group CEO at LegalforLandlords, says: “Tenancy fraud is a growing and increasingly complex issue across the private rental sector, and these figures highlight just how significant the financial impact has become for landlords. While many scams are becoming more sophisticated, a large proportion can still be prevented through thorough, fastidious checks and robust legal processes at the very start of a tenancy.
“The reality is that tenant fraud is now as much a technology challenge as it is a procedural one. Traditional document-based referencing – such as payslips or bank statements – is becoming less reliable, as AI tools can now generate highly convincing fraudulent documents in a matter of minutes.”
DATA VERIFICATION
He adds: “As a result, the industry is shifting towards direct data verification, including Open Banking, HMRC income validation and forensic analysis of financial records. This is where innovation is playing a crucial role, helping landlords and agents move beyond surface-level checks to truly verify tenant credibility.
“At the same time, wider market pressures are increasing the risk. With rents rising, affordability tightening and possession timelines extending, the cost of getting tenant selection wrong is higher than ever. In this environment, having the right agreements, documentation and processes in place is critical, not only to prevent fraud, but to ensure landlords are in the strongest possible legal position should issues arise.
“Ultimately, prevention and preparation are key. Landlords and agents who embrace more advanced verification methods and put the right protections in place will be far better equipped to mitigate risk, avoid costly disputes and protect their investments in an increasingly challenging market.”
