Letting agents relying on automated referencing at the start of a tenancy could leave landlords exposed to organised fraud, property damage and lengthy possession proceedings, Chestertons has warned.
The agency is calling for stronger identity and affordability checks, supported by open banking and regular inspections after tenants move into a property.
Its warning follows BBC Panorama’s There’s a Gangster in My Flat, which investigated cases where criminals allegedly used forged identities, references and financial documents to secure rental homes.
Properties featured in the programme were subsequently used as a brothel, a cannabis factory and for unlawful subletting, despite landlords instructing letting agents to undertake pre-tenancy checks.
FAKE DOCUMENTS
Chestertons says agents should not assume that a bank statement or apparently successful automated reference provides sufficient protection.
Open banking can allow authorised referencing providers to examine genuine account information rather than relying entirely on PDF statements supplied by applicants.
Adam Jennings (main picture), Head of Residential at Chestertons, says: “Fake bank statements aren’t uncommon, but we catch them. That’s the value of having an experienced compliance team scrutinising the evidence, rather than relying on an algorithm to tick a box and move on.
“A PDF bank statement doesn’t tell you much on its own. Open banking means we’re looking at the real account, in real time, rather than relying solely on a document someone has put together themselves.”
Chestertons uses a specialist referencing supplier alongside bespoke internal criteria. Its managed properties are also inspected twice annually, subject to tenancy terms and the required notice.
ONGOING CHECKS
Jennings says fraud prevention should continue throughout a tenancy because occupation can change after a legitimate tenant has passed the original checks.
“Checks on move-in day aren’t enough,” he says. “Some of the issues we see don’t happen at the start of a tenancy. A legitimate tenant may move out and someone else move in without the landlord being told.
“Good property management is about staying close to the detail throughout the tenancy, identifying problems early and giving landlords clear guidance when action is needed.”
Panorama featured one landlord who reportedly lost four-and-a-half months’ rent and incurred a £4,500 repair bill after discovering his property had been used as a brothel.
COMPLIANCE PRESSURE
Chestertons says stronger oversight had become more important following the introduction of the Renters’ Rights Act.
The legislation prohibits agents and landlords from inviting, encouraging or accepting offers above the advertised rent. Councils can impose a civil penalty of up to £7,000 for breaching the rental-bidding rules, while wider serious offences under the Act can carry higher penalties.
Jennings adds: “Effective referencing, regular inspections and proper compliance processes help protect landlords, properties and legitimate tenants.”
