A PropTech firm says it recently saved one of its premium Build to Rent (BTR) clients more than £160,000 by preventing a US-based criminal from illegally renting one of its luxury apartments in East London.
Homeppl has previously reported that illegal subletting and other financial crimes within the BTR sector is rife, with a 364% increase in fraudulent tenant applications in the sector reported in the past six months alone.
While a certain demographic of tenants find premium BTR properties hugely attractive option – fully furnished to a high finish, onsite extras (like security, gyms and pools), all utilities bundled into the monthly price, no deposits required - this also makes them an easy target for fraudsters, Homeppl claims.
It says that most BTR tenants don’t have to pay a deposit and, thanks to the existing referencing process many BTR owners have in place, they only need to pass one identity check before being approved – leaving it open to unscrupulous operators.
The company also says many fraudsters are aware of not needing to check the building’s quality as they are fully furnished and ready for tenants, meaning criminals from anywhere in the world can target high-value London-based BTRs.
Alexander Siedes, chief executive and founder of Homeppl, said: “The higher the value of the property, the higher the risk of fraud, as illegal subletters can get immediate access, pocket huge profits and disappear before the letting agent has realised anything is wrong. And as there is often no consequence for making a fraudulent application, these people will just keep trying until they succeed.”
This was shown in a recent case involving a BTR client of Homeppl’s, which was targeted by a US-based individual in their 40s, who applied for a three-bedroom luxury apartment in East London for a 24-month lease. This had a total contract value of nearly £164,000.
But Homeppl’s ‘unique and meticulous’ fraud detection process meant that their attempt was prevented before they could start defrauding.
Samantha Byars, account manager at Homeppl, worked closely with the client on the case. She said: “Our BTR clients - particularly those letting premium apartments in London - know that their properties are an attractive target for criminals looking to fraudulently apply for tenancy.
“Therefore, they know it is absolutely critical that they have robust and rigorous measures in place to identify this activity and prevent fraudsters from accessing their apartments, not only to protect the business from huge losses, but ultimately to protect their valued and honest tenants while maintaining the reputation they’ve built by offering luxury apartments.”
Siedes concludes: “Tenant fraud tends to be higher in London, while the BTR sector is increasingly being targeted, meaning high-end BTR apartments in the capital are hugely attractive to fraudsters looking for an apartment they can illegally sublet or conduct illegal activity from. Companies looking after these developments need to ensure they have procedures in place to identify these issues and stop them.”