When looking at fraud in the property sector, lettings is often considered to be a lower risk than property sales.
With the transitions tending to move faster, fraud in lettings tends to sit at an intersection of identity, ownership, client money, compliance and sanctions. Guidance from HMRC makes it clear that there is no less risk for lettings; in fact, there can often be higher exposure for channelling illicit funds, obscuring ownership and moving money quickly via deposits, fees and rents.
Lettings naturally combine several conditions that financial criminals will actively seek out, these include speed, distance, urgency and communication that tends to be more fragmented. It’s very often the case that tenants are under pressure to secure a property quickly, and with some landlords instructing remotely, agents may be handling money before they’ve even met everyone involved in person.
Another factor is that sanctions obligations have tightened considerably. From 14 May 2025, letting agents became part of the bracket of "relevant firms" for financial sanctions reporting purposes. On top of this, updated guidance from January 2026 confirmed that the UK Sanctions List is now the sole source for UK sanctions designations, meaning accurate screening is now more important than ever.
When dealing with tenant fraud, it goes well beyond affordability concerns, with risks including false identities, false identity details, misleading information about income, fake documents and attempts to move money via means that don’t fit with the customer's typical profile.
Conducting manual document reviews can be a slow and inconsistent process, and one that is vulnerable to human error and unable to detect the most sophisticated identity fraud attempts. Whereas digital identity verification will help agencies to more accurately confirm identities, as well as create much stronger audit trails.
Some traits, such as a rushed viewing, a same-day holding deposit, a passport that’s been emailed across, may all feel entirely routine, but if the identity provided is fake, or the financial profile is one that’s been misrepresented, then the agency may be putting itself at significant risk, without even realising it.
Very often, tenant verification will receive more checks and attention than for landlords, but this is a mistake, as landlord fraud can include false ownership claims, impersonation, attempts to let property via someone who isn’t the genuine owner, etc. The HM Land Registry actually warns of fake landlords attempting to let properties they don't own, so specifically advises tenants that they should be checking title registers before they pay any rent or deposits.
In the event of an agency accepting an instruction from the wrong person, the consequences extend far beyond just one bad listing. There’s reputational damage, illegitimate marketing, money lost, unlawful occupation and all of this can come from someone who's familiar to you, as scammers can exploit proximity, familiarity and even weak document checking.
Manual checks can work, but the issue with them is that they can become unstuck very easily under pressure. The nature of financial crime is that sanctions lists and risk indicators can change constantly, and manual document inspection is time-consuming and inconsistent, and at risk of human error. Digital systems offer the ability to verify someone remotely, which can be very helpful for lettings. They can also detect inconsistencies quickly and consistently, as well as support the creation and maintenance of robust compliance records.
In lettings, a landlord may need both ownership and identity checks, a tenant may have to have identity, sanctions and risk screening, and the agency may be required to understand who is behind the funds and whether the overall transaction pattern makes sense. Tenant verification should form part of a broader risk control and not simply a referencing step.
When building a compliance process that’s strong and can stand up against the rate at which these crimes and the attempts to hide them are progressing, it doesn’t have to be an intrusive one, but it does have to be a deliberate one. Here are some good checks to follow when looking at what yours should include:
Verify. It’s essential that you check to see that both the tenant and the landlord are both who they say they are. A good tip is to always ask yourself: Is this person who they claim to be, and do they have the right connection to this property?
Check. Make sure to check details around ownership and authority, not just the identity. When dealing with landlords, look into whether the instructing party is the registered owner or an authorised representative, and check if they form part of a structure you are familiar with.
Screen. Checking sanctions lists and for any wider risk should form part of the screening that belongs to a wider due diligence process. This is particularly important for portfolio landlords with any overseas connections or complex ownership structures.
Watch. Pay attention to the route the money takes. Make sure you are alert to any unusual payment journeys, urgency that doesn’t seem necessary, third-party funding or a missing link between the parties and the money.
Record. Having a thorough audit trail so that you can demonstrate to auditors what was checked, when, how, if anything was flagged, and what the result was, is a crucial part of any compliance guidance. You need to be able to prove that you performed your due diligence to raise any concerns as they arose and that you investigated them thoroughly and in a timely manner.
The effects of letting fraud in the UK can be long-term; it can disrupt and delay occupancy, increase disputes and damage relationships that have been built. An illegitimate landlord case can have a huge negative impact across an entire branch, and a missed sanctions issue can even result in being a regulatory matter. Stronger and more efficient checks aren’t only defensive, they are a key part of running a more successful, resilient and professional lettings operation.
The strongest lettings businesses are the ones that don’t treat checks as additional paperwork, but instead, as part of a safer and smarter onboarding process.
Here at SmartSearch, our digital identity verification and AML solutions help letting agents carry out stronger tenant and landlord checks with greater speed, accuracy, and confidence. By combining identity verification with sanctions screening, risk monitoring, and clear audit trails, we help agencies detect fraud earlier, verify ownership and authority, and build more robust compliance processes across every stage of the lettings journey. If you’re looking to strengthen your fraud prevention measures and protect your lettings business from growing financial crime risks, request a free demo today or contact our team for more information.