Rental scams on the rise: How to protect your clients

The property market has never been as flooded with rental scams as it is now. Unscrupulous individuals are targeting your prospective clients and trying to get them to part with their hard-earned money for nothing. Prop Data has put together this guide to rental scam detection for practitioners. We outline the standard modus operandi and provide a list of tips that you can share with clients.

The most common strategies in property rental scams

There are three main scam types currently circulating in the property crime sphere. The first is phantom properties. Fraudsters create eye-catching listings using attractive pictures that they have acquired elsewhere on the internet or created with AI. These “homes” are often advertised at below-market prices to lure victims who may be struggling to find a home that they can afford. Once a would-be tenant makes contact with the scammer, they will be asked to pay a deposit or an upfront rental payment. The scammer will often tell them that there has been a lot of interest in the property and that they must pay immediately to avoid missing out. Once this payment has been received, the scammer disappears with the money.

A similar strategy is hijacked listings, where rental scammers will duplicate the pictures and information found on a genuine listing, and alter the contact information. The idea is to trick would-be tenants into thinking that they are speaking to the legitimate owner of the property. As is the case with phantom properties, the scammer will stop contacting the tenant once the deposit payment has been received.

The third type of popular scam is fake agency scams, in which scammers pose as rental practitioners or property managers, requiring fees for services such as background checks or viewings. After receiving the payment, the supposed practitioner either provides false rental information or disappears entirely. People executing these rental property scams typically have professional-looking emails and fake credentials to make themselves appear legitimate.

Landlords are also being scammed

Property investors need to be made aware that they are also not immune to rental scammers’ tactics. Property practitioners need to highlight the dangers of scammers who pose as trustworthy tenants, only to default on payments and either leave or place landlords in the nightmarish scenario of having to follow the legal course for eviction. Unscrupulous tenants may also sublet your property to several “tenants”, collecting multiple deposits or rents before disappearing. Landlords also need to be aware of scammers posing as tenants with forged income, ID and references.

Strategies landlords and tenants should follow to avoid becoming victims

Luckily, there are several rental fraud prevention strategies that you can share with tenants and landlords to minimise their chances of becoming scam victims.

1. The first and most obvious way of protecting tenants from rental scams is to encourage them to work with a legitimate property practitioner. Remind your prospective clients of the importance of checking the practitioner’s registration with the Property Practitioners Regulatory Authority (PPRA).
2. The second golden rule for prospective tenants is to always view the property before sending any form of payment. A common scammer’s strategy is to insist on a deposit before viewing the property. This should always be seen as a red flag.
3. Another fake rental ad warning sign is requests for payments via untraceable methods like wire transfers, prepaid cards and cryptocurrency. Any “landlord” requesting payment with a method other than an EFT should be treated with suspicion. Secure payment channels for rentals are of key importance.
4. A bogus landlord may be reluctant to put anything in writing, so ensure that all communications, lease terms and payment agreements are received in the form of official documents.
5. If a property’s rental price seems too good to be true, it probably is. Prospective tenants need to be made aware that scammers often post listings with particularly affordable prices to appeal to their victims.
6. Pressure to send money quickly is another common tactic. Victims are often asked to pay a deposit, first month’s rent or application fee without having viewed the property.
7. If a landlord is unavailable to facilitate a viewing, your clients should recognise this as a red flag. Common excuses include landlords allegedly working overseas or being away for business purposes.
8. Would-be tenants need to be aware that legitimate rental agreements include specific details. The lease amount, lease duration, security deposit and notice period should all be stipulated in the lease. Tenants should also be on the lookout for telltale signs of unprofessionalism, such as poor spelling and grammar, when reading lease agreements.

Protect and support your clients holistically

The safest way for a landlord or tenant to prevent online rental scams is to use a reputable practitioner, and that’s where you come in. By advising prospective clients about these risks, you highlight all the reasons why they should use your services. You can boost the service your agency offers landlords and tenants by making use of Prop Data’s proptech innovations. Contact us for more information.