10 May Rental Frauds in the UK
Rental fraud is a common crime conducted by someone who poses as a landlord or a letting agent in UK. The fraud works like this: a prospective tenant is shown around a property, in case he/she likes the proposal, he/she is required to pay an immediate up-front holding deposit, a sum that is often taken to reserve a property in advance or to cover the incidental costs, which may or may not be required after the rent, often in cash. The “victim” pays the sum, which can easily be several hundred pounds or even more than that, however, the landlord disappears with the cash and the deal breaks down. Normally there is no way of tracking the scammer down, which leaves the victim empty-handed.
Described and alike frauds have become a serious issue for prospective tenants, who are looking for rentable houses throughout the UK. Even the special anti-fraud police unit, Action Fraud, which accumulates the national fraud statistics, has spoken out that there has been an increase in the number of rental fraud cases being reported to them. However, the research conducted by YouGov in 2016, shows that 2.8% of private renting adults say that they have been victims to this type of fraud during the last five years. Estimated equivalent of the given percentage is almost a quarter of a million people. This is another proof of the fact, that the discussed problem is certainly relevant for a huge amount of people around UK.
I spoke with Alex Hughes, a 20-year-old student who lives and studies in Cardiff, Wales. He found himself as the victim of the fraud during the visit to London for 2 weeks with his friends in the summer of 2019. Mr. Hughes mentioned his concerns over the incident during our conversation.
“I, with 3 foreign friends of mine wanted to visit London for 2 weeks during the summer of 2019. Since from the 4 of us, I was the only one living in UK, it was my duty to find the rentable flat, which would have fully met our requirements. Finally, after hours of rummaging online I found the flat on https://www.home.co.uk/, which was big enough for 4 of us and affordable as well. During my online communication with the landlord, she insisted that we paid 400 pounds in advance to reserve the property and to cover the incidental costs. She said that the sum would be reimbursed after 2 weeks in case her property was undamaged. The mentioned sum seemed pretty overvalued at first, however, the acquired feeling of rejoice from finding the desired apartment blinded me and I convinced my friends there would be no problem at all and the sum would be returned immediately after our stay at the apartment”.
Obviously, the problems started occurring only after Alex and his friends left the apartment and London.
“At first, when I reminded her about the 400 pounds, she assured me that transferring money from one country to another was an issue, which would be settled in 1-2 days. After waiting for another 1-2 days we lost our patience and tried to contact her via Whatsapp, however, we couldn’t reach her number. After trying this several times, I reached out to the website I saw her flat advertisement on. Even they were unable to reach her number, or they just didn’t care about my problem”.
Alex was left empty-handed after all and his friends criticized him as well. Obviously, 20-years-old students did not have neither time nor resources for taking the case into court. This is only one of the thousands of cases concerning the rental fraud in UK.
According to a study conducted by people and business finder 192.com, it is revealed, that one in ten people have been scammed by a landlord or lodger in the UK. Fraudulent landlords are making 755 million pounds a year from the scam, and it costs individuals 2,394£ per victim.
These stats once again verify the fact, that the “business” from which individuals or a group of scammers are earning 755 million pounds a year, is impossible to vanish by itself. The case of Alex and his friends was only about as much sum as 400 pounds, however, there are people out there, and they are totally genuine, who are suffering financial losses of thousands of pounds and they need some kind of help. Local authorities have to bear in mind that they need to come up with a solution, which simultaneously will not be destructive for the rental business in UK and which will avert Alex and the likes of him the potential cases of fraud.
Rental fraud pyramid scheme is enlarging year by year and thousands of people are into this fixed order. As we may already know, hundreds of thousands of people are trapped down this stream every year and as sadly as it may sound, we only have limited amounts of solutions, whatsoever. There comes the big question, what can we possibly do about this? How can we establish trust in capitalistic order, which is against government regulatory intervention, when you can’t trust a landlord or as we may call them – “illusionist landlords”. There has been the government intervention into these kinds of schemes throughout Europe, in Spain, Italy, France and even in the UK, however, as sadly as it may sound, as I already mentioned, we only have the limited amounts of solutions and this is destroying bonded trust which has been establishing since the year 1809 and which is assisted through the law of rent by very well-known and extremely admired British economist David Ricardo.
There is an amazing and horrifying story that took place in London in 2014. When R.A found a flat in London, where the room rent was below 780£ a month, it was a dream come true opportunity for her. As agent declared deposit would be 1000£ and eventually after that told her that she needed to make the payment shortly after the chat, as he had other potential renters knocking on the door. Shortly after the deposit was made the dream suddenly became a nightmare for her. R. paid the total sum of 1780£. Not a while after it turned out that the agent was fraudulent. They had obtained the keys to the flat by renting it off its owner through the website – Airbnb for the weekend solely. This is an example of successfully executed rental fraud. In the most cases Airbnb renter returns home to check the property. However, the owner of the flat returned to find couple of tenants aggressively knocking on her door and expecting to move in to the flat. In total, there were five people scammed, while fraudsters made solid £8,500. Sadly, none of this people including R.A got any money back, fraudsters were banned from the Airbnb, however, I understand that this is not a solution for this problem and, moreover, where there are hundreds of thousands every year. I want to discuss some distinct possibilities on how can the government handle this situation efficiently and we could only hope that it will work.
There comes the big question – What can government do to reduce the risk of rental fraud? Actually, we have some answers from the government officials and we also do have some promises to strengthen the rent law in the UK, let’s get into details. The most evident solution to rental fraud would be to merge a ban on holding deposits up into the ban on letting fees. With the knowledge that it was against the law to charge any up-front sums at all, prospective tenants would be much less likely to hand their money over to fraudsters. This may sound very promising, but it has its’ downside – the government has identified the risks, however, even without them, it is simple logic that banning holding deposits would give tenants much greater freedom and they would know they will not be charged if things in property goes out of hands. We may not want to admit, but we are in entangled state. In case we let holding deposits be, than we will definitely have serious problems with scammers and that is the situation right now, however, if we will toughen laws about rent, then we might have government-regulated rental market with relatively low real estate rentals and high prices. If there were higher risks for the owners of the real-estate then they would value them at a higher price to defy risks that the new stringent laws brought. There is lot to be considered and discussed about this matter and much more to be analyzed, however, a move away from the cash payments may help us – if you rent a car today, you will not be charged deposit upfront, on the contrary, the car-hiring firm will ask you to authorize a payment on a debit or a credit card, which they would only charge if you damage a rental car. The move away from cash payments would drastically reduce the risk of fraudulent activity. As good as it may sound, we still need to understand one thing, nowadays majority of people use their bank card whether it is debit or credit, but there are still people out there, who do not use bank cards, what can we do about them? These are the questions and riddles that will remain unsolved until local authorities start thinking about them.
