There is a sharp increase in money laundering and tenant fraud. Buy-to-let properties are susceptible to such mishaps. While most tenants are decent, you can’t take a chance. Analyse the potential risks tenants may pose to your property. Identify the best ways to protect yourself and the property from threat. If you are clueless about the steps to take to avoid fraud, read ahead. The blog lists the strategies to ensure legal renting.
7 Strategies to prevent your rental property from fraud
A landlord stands the risk of losing their property because of mere negligence. However, you can avoid it by taking the right precautions. One of the most important things to do is to register the property. You can create a profile at the RentProfile website. It uses the land registry’s online services to validate the property ownership of landlords and tenants. It is particularly helpful in England and Wales.
You can prevent fraud by signing up as a landlord. You get alerts regarding the property if someone attempts to impersonate you. Moreover, you can spot the person who advertises your property in his name.
Here are other ways to prevent your rental property from scams:
1) Register restriction with the land registry
You must contact the land registry and register the property. Apply after updating the contact and property-related details. The registry allows you to register up to 3 contact addresses. It includes email apart from the contact number. However, before registering the property, identify the property condition. Upgrade it to attract potential tenants and improve the property value. If you invested in legal bindings of registration, don’t worry.
Check external finance sources to get quick assistance. You may get one despite a low credit history. Explore property development loans for bad credit scores. Identify the areas needing renovation and repairs. Complete the project before registering the property. It eliminates further obstacles to gaining on-paper property ownership. Sometimes, just a basic registry is not enough. You must make additional efforts to secure the property from tenants.
Register for restriction on the registered property. Spot legal firms are providing the services. They charge a fee to restrict third-party access. A restriction warns the conveyancer of the circumstances. He must comply with the rules.
You can opt for standard and non-standard restrictions. The standard one prevents the conveyancer from claiming the property directly. He must confirm the ownership identity of the mortgage deed. If the person is the same, he can claim one.
2) Screen the tenant’s profile deeply
Whether the prospective tenant is a friend or unknown, the basic check is a must. The first part is a telephone interview. Ask the legal questions that confirm the person’s identity. For example- check whether he shares citizenship. Ask about the previous tenant agreements and pending payments. Next, analyse the employment condition.
The person’s credit report reveals the part in detail. However, ask about employment history just to know better. Confirm that the person doesn’t own multiple addresses. It signals the fraud chances. Don’t proceed if you don’t feel right for the person.
3) Contact employers to verify
As a landlord, you want to be sure you get the rent in a timely manner. The best way to do so is by verifying the income from the source itself. Identify the tenant’s employment details. Contact the employer and confirm the employment years, income and other financial records.
Decent employers may provide clear information about the tenant. If the person doesn’t share a reliable financial profile with the employer, don’t rent the property. Moreover, it will help you know whether the tenant provided the right information or not. –
4) Take referencing seriously
Utilise the best tools that may help you screen the tenant’s profile. For example, you can contact an agent who may help you spot legal tenants. He screens the prospective person’s profile and concludes the authenticity.
If you don’t want to rely on someone, do it yourself. Invest in the referencing tool setup. The tenant referencing system may help you confirm the tenant’s creditworthiness. Moreover, good tools help you identify deep fake information. You can reject such applications immediately.
5) Get a rent guarantee insurance cover
Insurance coverage is important at every stage of your financial life. It secures or protects your assets against physical or natural damage. Identify the rent guarantee insurance cover. It provides extra security if tenants deny paying the rent. It helps you ensure smooth eviction and take legal action if necessary.
The tenant cannot claim the property in that case. However, explore the cover and the benefits after detailed research. Generally, the extent to which you can protect your property depends on the insurance provider. It depends on the terms and benefits the company provides you regarding the property.
For example, some insurance covers the tenant’s missed rental payments. It also undertakes a percentage of monthly rent after eviction and legal actions.
6) Scrutinize the documents carefully
Apart from confirming the identity and insurance cover, screen documents carefully. Most landlords skip the detail screening due to multiple applications. Don’t rush towards getting the most profitable tenant quickly. It may end up being the worst decision of your life. Take time to review every application and supporting documents. However, you can still speed up the process without missing details. Here is how you can do so :
- Check the source of the documents received. It may include- domains from where the individual downloaded the document.
- Screen the contact numbers on Google to spot criminal background or theft history.
- Ask for original documents with Xerox. It helps you confirm whether the document is forged or real.
While most documents are real, the tips help beat forgery. Adopting due diligence while scanning tenants prevents fraud. It secures your precious assets.
7) Prevent illegal subletting
Subletting is when a tenant rents the property to other people. It is legal if it lies in the landlord’s knowledge. Alternatively, it is illegal. Avoid this by taking necessary actions. Here is what you can do:
- Carry out pre-tenancy referencing checks
- Ensure a no “sub-letting” clause in the agreement
- Conduct periodic inspections. It helps you know the name of the rental. If it does not align with the person you originally rented to, report it. However, collect proofs as evidence for the court.
Bottom line
These are some strategies to prevent your buy-to-let from tenant fraud. Registration and property insurance coverage are the best way to protect the foundation. It dissuades tenants from taking illegal action against the landlord. Moreover, the prospective tenant’s profile must be analysed carefully. Double-check the employment details and previous renting record. It helps spot legal tenants and avoid fraud.
