A rising problem in the Build to Rent (BTR) sector is tenant fraud. The busiest time of year for renters is usually the summer months, but scammers are on the rise during this busy season too so keeping an eye out is more important than ever.
Payment technology firm flatfair’s partnership with tenant referencing provider Homeppl aims to combat crime in the property market through technology.
Already the duo has prevented over £130,000 of Build-to-Rent fraud by flagging fraudulent tenant applications in four months.
How many homes are at risk?
Recent data from flatfair and Homeppl uncovers that 1.5% of tenant applications are fraudulent.
Nonetheless implementing the right technology is one way of detecting and preventing fraudulent activity.
Recent research provided by Knight Frank shows there are 46,178 existing BTR homes within schemes of 75 or more units. A further 84,350 homes have planning approval or are under construction.
This means that over 1,265 applications for new homes could pose a risk of cost bills or other issues for operators.
Franz Doerr, chief executive officer of flatfair, adds: “As investment in the build to rent sector continues to grow, it is vital that operators are protected from tenant fraud to ensure their focus can be on providing a best-in-class service to legitimate tenants.”
“We’re delighted to partner with a fellow PropTech firm who share our approach to revolutionising renting. Technology can play a huge role in streamlining the process, with our No Deposit solution bringing renting into the 21st century for both tenants and landlords.”
How to catch fraudulent Build to Rent activity
Unique tests that grasp behavioural analysis, open banking, and proprietary algorithms are used to detect fraud by Homeppl.
Using this method allows Homeppl to provide detailed tenant due diligence faster than conventional methods.
Flatfair offers a ‘No Deposit’ solution while Homeppl offers detailed referencing. The combination of these services reduces the risk of fraud and guarantees money does not get stuck in a deposit protection scheme.
Ben Harris, head of commercials at Homeppl says: “Working with flatfair is an ideal partnership for us at Homeppl. By joining forces with another innovative technology company we can combine our services and ultimately protect businesses operating in the property sector. It’s been an immense period of change for the sector more broadly, so we are hopeful that we can do our part in keeping it robust and stamp out deceitful behaviour.”
“Tenancy fraud is a growing issue and solving these problems requires specialist technologies and expertise to keep landlords protected. We look forward to working with the team in this space.”
According to research by Benham and Reeves, the total cost of evicting a rogue tenant can be over £31,000.
BTR relies on income to invest in high-quality facilities and amenities that are provided to tenants. Minimising the risk of fraud and non-payment of rent helps to prevent a loss of income.
Flatfair and Homeppl’s service is also available for traditional PRS landlords. Granting them access to create a Homeppl reference through the flatfair platform. Doing so streamlines the process and saves time by removing the need for operators to use multiple platforms.
Identifying the growing number of fraudulent applications helps understand what areas need to be better regulated and automated.
Partnerships such as flatfair and Homeppl are a step in the right direction to help minimise the possibility of criminals profiting from the BTR sector.