The shocking scale of tenancy fraud has been revealed and it's costing landlords an estimated £266m a month, with most victims unable to recover what they lose.
The research from LegalforLandlords found that 5% of landlords have experienced tenancy fraud.
That figure mirrors wider industry estimates, which also put 5% of privately rented homes in the hands of fraudsters.
With just over 5.5m properties in the sector, that points to more than 275,000 affected homes.
Tenancy fraud is growing
The group chief executive at LegalforLandlords, Sim Sekhon, said: "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."
He added: "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."
Most landlords don't recover cash
The firm says that based on an average monthly rent of £1,379, the total exposure rises to £379.8m each month.
But 70% of landlords who encounter fraud report recovering nothing, leaving £265.8m lost every month, or £3.2bn over a year.
Rent default accounts for 70% of fraud reported by landlords which usually involves tenants moving in with no intention of paying rent.
They then remain in the property, while not paying, as the landlord's possession action unfolds.
Separate data from the legal firm highlights that the average possession timeline stands at more than 26 weeks.
Falsifying tenant details
Illegal subletting is also widespread and was cited by 20% of landlords.
In some cases, landlords attempting to recover rent arrears find different occupants in situ, with no contractual link to the original tenancy.
Also, 8% of landlords report fraud involving falsified financial details, including fabricated employment records or income evidence used to pass referencing.
Identity fraud, involving false documents or credit profiles, is a big risk, while cheque scams see overpayments being refunded before the original payment fails.
Embrace verification methods
Mr Sekhon said: "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."
He added that having the right agreements, documentation and processes in place is critical, not only to prevent fraud, but to ensure landlords are in the best legal position should problems occur.
Landlords should also use advanced verification methods and have the right protections in place to mitigate risk, avoid expensive disputes and protect their properties.
Fraud problem facing landlords
The managing director of Accommodation for Students, Simon Thompson, said: "Fraud in tenancies is exposing landlords to unnecessary financial risk, with cases ranging from deliberate non-payment to unlawful subletting and falsified applications.
"Once a problem tenant is in place, lengthy possession timelines can extend the period of lost income, while it appears that recovering lost rent is often limited or non-existent."
He added: "There's no doubt that stronger upfront checks are becoming more critical as traditional referencing methods are increasingly vulnerable to manipulation.
"Landlords will increasingly need to adopt more robust verification processes as fraud technology progresses and ensure documentation is watertight to reduce exposure and protect themselves."
