Landlords urged to update tenant fraud checks amid AI document risks
New research reveals tenant fraud risks in the UK rental sector could reach £4.1 billion annually as AI-generated fake documents become widespread. Landlords must adopt modern verification methods beyond traditional paperwork.
Landlords and letting agents face a growing challenge as advances in artificial intelligence make it easier to produce convincing fake tenant documents such as payslips, references and even identities. According to research by Goodlord, 41 in every 1,000 tenancy applications were flagged for suspected fraud between July 2025 and June 2026, exposing the private rented sector to potential losses estimated at £4.1 billion each year.
This surge in sophisticated tenant fraud means that relying on traditional document checks is no longer sufficient. Landlords are being urged to modernise their tenant referencing processes by independently verifying the information applicants provide and employing digital identity verification tools. These measures aim to ensure that applicants are who they claim to be and that their financial information is accurate.
AI advances increase tenant fraud complexity and detection challenges
Historically, creating fake tenant documents required technical skill and time, limiting the scale of fraud. However, generative AI tools now enable almost anyone to produce highly realistic documents within minutes. This technological shift has lowered the barrier to entry for fraudsters and made visual detection by landlords or agents increasingly difficult.
Traditional checks such as reviewing payslips, bank statements and landlord references can be easily circumvented with AI-generated forgeries. The research highlights the need for landlords to go beyond face-value document inspection and to corroborate information through multiple independent sources.
For example, identity verification services that use biometric data or government databases can confirm an applicant’s identity more reliably than copies of ID alone. Similarly, Open Banking technology allows landlords or their referencing agents to access applicants’ financial data directly from banks, with consent, providing a clearer picture of income and affordability.
Modern tenant screening requires layered verification and technology use
Landlords are encouraged to build a comprehensive profile of prospective tenants by cross-checking employment history, income, previous addresses and references. Discrepancies or inconsistencies should prompt further investigation rather than acceptance of documents at face value.
While this approach may involve additional costs, especially when using professional tenant referencing and identity verification services, it can prevent costly issues later in the tenancy. Smaller landlords who do not undertake tenant checks frequently may find outsourcing these tasks particularly beneficial.
The article compares tenant screening to the due diligence landlords perform when purchasing investment properties, emphasising that tenant selection deserves similar care. Although there is pressure to fill vacancies quickly, thorough checks reduce risks of fraud-related losses and tenancy problems.
Balancing thorough checks with reasonable tenant treatment
Landlords should maintain reasonable and proportionate checks, recognising that most prospective tenants are genuine. The goal is not to treat every applicant with suspicion, but to adapt to the reality that fraud tools have advanced significantly.
By verifying information independently and using technology to cross-check details, landlords can improve their confidence in tenant applications. This shift is necessary to keep pace with fraudsters who exploit AI-generated documents to bypass traditional screening methods.
Implications for landlords and letting agents
Landlords need to review and update their tenant vetting processes to include digital identity verification and Open Banking checks where possible. Letting agents should advise clients on these modern methods and consider integrating them into their referencing services.
Documentation and record-keeping practices should also evolve to capture evidence of these enhanced checks, supporting compliance and dispute resolution. Landlords may need to budget for higher referencing costs but should weigh this against the potential financial impact of fraudulent tenants.
Training and awareness about AI-driven fraud risks will be crucial for landlords and agents to recognise red flags and understand when to escalate concerns. Industry bodies and regulators may also provide updated guidance or standards to reflect these new challenges.
Keeping your rental properties compliant
The Landlord Association (TLA) supports members in adapting to emerging risks such as AI-driven tenant fraud. Through membership, landlords and letting agents gain access to compliance resources and practical information on tenant verification and documentation management.
TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, offers tools to organise property records, monitor regulatory developments, and record tenant checks and communications. This can help landlords maintain evidence of due diligence and stay informed about best practices in tenant screening.
Exploring TLA membership and ORBIT BETA access can assist landlords in managing the complexities of tenant fraud prevention and ensuring their portfolios remain compliant with evolving standards.
Adapting tenant verification processes to the realities of AI-generated fraud is becoming essential. Landlords who embrace modern tools and verification methods are better positioned to protect their investments and maintain secure tenancies.
Sources: Landlord Today
TLA - The Landlord Association