Fraudulent tenancy applications could be exposing the UK’s private rented sector to up to £4.1 billion in annual financial losses, according to a new report from property technology firm Goodlord.
The report, which analysed over one million completed tenant references between April 2023 and July 2026, found that artificial intelligence has made it significantly easier for fraudsters to create convincing payslips, bank statements, and employment references.
Fraud rates surge 78% year-on-year
Referee-flagged tenancy fraud has risen by 78% year-on-year nationally, with fraud rates remaining approximately 40% higher than the Q2 2023 baseline. The data reveals that one in every fifty applications for high-value properties involves sophisticated fraud.
Oli Sherlock, managing director of insurance at Goodlord, said: “Increasingly, fraudsters aren’t simply forging paperwork; they’re creating entirely believable identities that can withstand traditional referencing checks. The uncomfortable truth is the sector is being caught out by these criminals.”
The financial exposure comes at a time when letting agents face increasing pressure to assess landlord profitability amid challenging market conditions.
London records highest fraud rates
Greater London consistently records fraud rates approximately twice the national average, making it the country’s fraud hotspot. The West Midlands has the second-highest rate, followed by the North West. Scotland, Wales, the North East, and the South West record the lowest fraud rates.
The report warns that the cost of failing to detect fraudulent applications has increased significantly, with possession proceedings already taking more than 15 months in some cases. This timeline is expected to extend further under the Renters’ Rights Act.
Sherlock noted: “Beyond these startling numbers, a single fraudulent tenancy creates a ripple effect. It places landlords under emotional pressure. It consumes countless hours for letting agents. It clogs up the court system. It also ties up homes that could otherwise be available to genuine tenants at a time when housing supply is already critically overstretched.”
Industry implications
The rise in AI-enabled fraud presents challenges for an industry already grappling with AI-related operational issues. The report emphasises that fraudsters are now creating entirely believable identities capable of passing traditional referencing checks, requiring the sector to adopt more sophisticated verification methods.
The findings highlight regional disparities in fraud exposure and suggest that landlords and agents in high-risk areas, particularly London and other major urban centres, face disproportionate financial and operational risks from fraudulent applications.
