Fraud-Proof Your HMO: Spotting and Avoiding Tenancy Scams

Fraud-Proof Your HMO: Spotting and Avoiding Tenancy Scams

When renting out a room in your HMO, the last thing you want to do is fall prey to tenancy fraud. However, it is a real issue, with rising living costs and interest rates putting even more pressure on tenants.

While you may take various preventative actions, you should also be aware of a few red signals. These could indicate a potential problem, and you should either avoid or explore further before renting your rooms to the tenants.

1. The prospective tenant is rushing to move.

If a prospective tenant is in a hurry, you, as their possible landlord, must pause to ask yourself a crucial question: Why? Of course, there may be excellent, valid reasons for their desire to relocate quickly – a sudden change in circumstances, such as a relationship breakdown. However, their desire to relocate may indicate that they have been evicted from their previous residence and must find a new house as soon as possible.

2. Pushing hard to close the deal

This sense of urgency will most likely manifest itself in future stages of the process. If they are hurrying to close a deal quickly to obtain your property and are attempting to avoid typical due diligence checks in the process, it is another clue that their haste may be motivated by anything other than what they are claiming.

3. A reluctance to offer the required information

To proceed with a tenancy, you should request identifiable information such as full name, date of birth, and so on so that you can vet their application and uncover any history of arrears or poor behaviour. A reluctance to offer this type of information could indicate that the potential tenant is not who they claim to be and is attempting to commit fraud or hide negatives. It is a good idea to qualify candidates before inviting them to viewings; this will give you a preliminary notion of whether you want to offer them a tenancy following the viewing. Here’s a blog we wrote on the questions you should be asking – 21 Important Qualifying Questions HMO Landlords Should Ask Tenants

4. Refusing to do a credit check.

Another step in the rental process should be a credit check to guarantee your prospective tenant can make payments. If they refuse or appear unwilling to do so, they may have a criminal record or a poor credit history that they are attempting to conceal from you, putting them at risk of rent arrears.

5. Requesting to pay in cash or paying ahead

While upfront payments may appear to be an unexpected benefit for you as a landlord, you must question yourself why. Money laundering is one possibility while attempting to persuade you to complete a transaction quickly is another. Perhaps they seek to build your trust to misuse you later. Similarly, be wary if they insist on paying with cash. Is there a reason they’re not leaving a paper trail?

6. Trust your instincts.

As a landlord, you must be on the lookout for these red signals, and as with any red flag, trust your instincts. Investigate whether anything they are doing raises red flags. Recognising these warning signals allows you to take the necessary precautions to avoid being a victim of tenancy fraud.

If you need help finding, qualifying, referencing and formalising tenancies for your HMO, then we can help. Why not reach out to our team at 01233 367 367.