Tessa Shepperson Newsround #105

Some news stories we picked up from the past week.

Beware fraudulent tenant applications

This post from Property Industry Eye contains a warning from London agent Benham and Reeves who say that they have seen an increasing level of fraudulent applications.

His firms saw 16  such applications in June for example, five of which involved fake passports.

The fraudulent applications will involve one or more of:

• Fake passports
• Fake bank statements
• Fake companies named as employers with
• Cloned fake websites with similar domain names

Marc von Grundherr, director of Benham and Reeves, said:

This surge in fake applications is a very worrying statistic for a rental market that is already straining under the current requirements of ‘generation rent’ and this increase demonstrates the importance of using a bonafide referencing company, where staff have been given specialist training from the National Crime Agency on recognising fraudulent documents.

Unfortunately, the majority of referencing companies do not even collect ID and proof of address, and conduct referencing as a sideline, in order to up-sell other services and earn commission.

Letting agents using one of these companies or making checks themselves are highly likely to end up with these fraudulent chancers flying in under the radar and into a rental property.

The post gives an example of a recent case where the fake documentation was very good and had passed an anti-money laundering check.

Agents –   you need to be vigilant to watch out for discrepancies in the information provided to you as the case of Hale v. Blue Sky Property Group shows that you can be held liable.

The Tenant Fees Ban to blame?

This report on the same story also claims that the rise in criminality is due to the tenant fees ban, which prevents letting agents from charging tenants for referencing, and says the problem is going to get worse. saying that

criminals have been emboldened by the fees ban, which means they can submit multiple applications for different properties in the knowledge it won’t cost them a penny, and that the landlord will foot the bill for referencing.

Local Councils failing to prosecute rogue letting agents

The National Landlords Association have learned that over half of all Local Authorities failed to prosecute a single letting agent in the four year period 2014/15 – 2017/18.  Freedom of information requests showed:

• 53% did not bring any prosecutions against agents
• a further 32% prosecuted three or fewer
• But of the 20 Councils questioned, 13 had introduced landlord licensing schemes

The report goes on to say

There are some 16,500 letting agents in the UK. They play a vital role as intermediaries between landlords and tenants. But some letting agents make unauthorised alterations to a landlord’s property, leading to a breakdown of trust between the tenant and the landlord. Also, they sometimes let out a landlord’s property to multiple tenants, effectively creating an illegal “house in multiple occupation” (HMO). Given that the licensing laws on an HMO are stricter than those for a single occupancy property, this can leave the landlord liable to fines of up to £30,000 or even criminal charges.

Richard Lambert, the NLA CEO said:

We were shocked to find that so few letting agents are being prosecuted by local authorities. While many local authorities have introduced licensing schemes to crack down on rogue landlords, they seem to be allowing letting agents to get off scot-free. This must stop.

The NLA also recommend that landlords check out their agents thoroughly before employing them and in particular ensure that they are a member of a Client Money Protection Scheme.

Call for Evidence on Deposit Protection

The Government has issued a consultation document seeking to understand the barriers that tenants face when moving from one property to another.

This aims to build on the work of the Tenancy Deposit Working Group which has been looking at this issue for the past year and considering whether improvements can be made to the system.  For example a ‘passporting’ system.

David Cox, CEO of ARLA who have been sitting on the working group said here:

For deposit passporting to work we need to ensure that both the outgoing landlord’s deposit can be used if needed, while the incoming landlord has certainty they will get the full deposit they have agreed by the tenant.

Affordability for tenants of any bridging loan or insurance policy will be key if deposit passporting is going to be a workable and affordable solution for the future of deposits.

The Consultation will close at 11.45 pm on 5 September,  You can submit your evidence online via the link on this page.

Snippets

• The Guardian reports numerous complaints about the Crown Estate which manages the Queen’s £14bn property portfolio
• In a backlash against the government leasehold reform, it is pointed out that it does nothing for existing leaseholders
• Government Minister intervenes in an enforcement row between landlords and Hull City Council
• The Negotiator reports on the developments at Battersea Power Station
• New online system for tenant benefit payments set for launch
• TDS to help fund research into tackling low standards in the PRS
• CAB report looks at hazardous conditions in the Private Rented Sector
• Could Airbnb devastate the housing market in key cities?
• Thousands flee London for a quieter life