There has never been a better time to be a buy-to-let landlord in the UK. If you need help figuring how much you can afford to borrow, check out our Buy to Let Calculator. Owing to the difficulties faced by first time buyers in getting on to the property ladder, there are now more people than previously looking to rent property for longer; the shortfall in rental properties to meet demand is therefore driving rents upwards providing landlords with great returns. There is a similar picture across the Atlantic, with the proportion of the population renting also on the rise in America. However, it is not all good news for landlords. Recent research shows that being a landlord places you at increased risk of being a victim of identity theft; some tenants are also more susceptible to this form of fraud.
Landlords and tenants at greatest risk
CreditExpert, who provide customers with access to their credit report and protection against identity theft, have released a report entitled UK Victims of Fraud. The results show that almost half of the victims who knew those impersonating them were landlords; this is even more likely if the landlords had lived there themselves before letting out the property. According to the study over 40% of identity thefts were completed by someone living in the property, taking the identity of a previous occupant, before moving on. Unscrupulous tenants use their landlord’s name and the address of the property that they have rented for credit cards, loans and to buy products via mail order. Opening post for their landlords has provided additional information allowing them to commit further frauds. Landlords aren’t just at risk from their tenants; others involved in the property industry can also use the details of landlords to their financial gain. This is highlighted in the case of a mortgage advisor who was convicted in 2011 of using her clients’ personal information to obtain over £500,000 worth of credit against their properties.
However, certain tenants can also be put at risk of experiencing identity theft. Those who frequently move around from one property to another, potentially have a greater chance of receiving thousands of pounds of false debts. If you’re looking for a buy to let mortgage that is self cert and no income that may be a great option for you. This is again more likely for tenants who live in flats or apartment blocks where numerous people use the same mail box, allowing criminals to steal their neighbours’ details.
The most severe cases
If mounting up debts in their landlord’s name wasn’t enough, a very small handful of tenants take things a step further; some even sell the property which they are renting. Between 2010 and 2012 there were 50 cases of fraudulent house sales recorded by the Land Registry; in nearly all cases the owners lived elsewhere, though they did not all relate to rented properties. Each year the Land Registry has to pay out millions of pounds in these situations in compensation equivalent to the value of the property to make up for the loss to the rightful owner or the buyer who has made the purchase in good faith. To tackle this problem the Land Registry has set up a counter-fraud department and has developed software to highlight unusual activity, as well as promoting the issue to increase awareness amongst those home owners at greatest risk. Owners who don’t live in a property can also now take out restrictions to prevent the sale of their property, so that this can only proceed with proof of ownership. Additionally, it is suggested that to prevent the unlawful sale of your home by another, it is safer that the Land Registry has your solicitor’s address rather than your own if you are not living in the property.
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Steps to minimize your risk of identity theft
Landlords and tenants:
- Regularly check your credit history and rating, as this can give a good indication whether someone has taken out credit in your name; it is especially useful to do so two or three months after you have moved. Services, such as that provided by CreditExpert are available, which can alert you if any significant changes are detected.
- Redirect your mail when you move. A quarter of people forget to do so; don’t let this be you, as even junk mail can be used to steal personal information, which could then be used to take out credit in your name. Royal Mail in the UK and the United States Postal Service both offer redirection facilities. However, in addition to using this redirection service, contact your bank and anyone else that you do business with to ensure their records are updated for your new address. This is especially important if you are taking out a let to buy mortgage and have only just moved out of the property before your tenants arrive.
- Sign up to the Mailing Preferences Service so that your name is removed from the main mailing list on every occasion you move; this service is available in both the UK and USA.
- Landlords have a duty to protect their tenants from potential identity theft. If you are a landlord and own a group of flats, install a locked mailbox for each property. Equally, if you live in an apartment block without secure mail facilities discuss with your landlord whether this can be arranged.
- Should you suspect your mail may have been taken by someone else contact Royal Mail or the United States Postal Service, as they will be able to advise you whether a redirection has been set up for you post without you being aware.
Additional points for landlords:
- Landlords should always request references for their tenants to check that they are genuine and concerns have not previously been raised about their conduct. Services are available that can collect references for you, though you can equally request these yourself directly. However, don’t just check with their current landlord, ask the second last landlord as well; the owner of the property they are presently in may provide a glowing reference just to make sure they leave their property as soon as possible.
- It is also best practice to request a proof of ID and address, though use Credit Search – which uses the Electoral Register – to check they do indeed live there. If they are in employment, request their employer’s details, including a landline number, so that you can confirm this; though a quick search online will show whether it is a bona fide company.
- A Google search can also be used to highlight anything sinister about a potential tenant. This proved very useful for Lawsons, a letting agent in the West Midlands; they found a potential tenant who wanted to pay for a whole year of tenancy in advance had just been charged with defrauding her employer of £80,000. Additionally, you may consider Rent Guarantee to ensure that your rent payments are always made on time.
Additional points for tenants:
- If you live in a shared property, it might be possible for you to arrange with your bank to collect debit or credit cards, or valuable information directly from your local branch to remove the risk that a dishonest housemate may intercept them.