According to new research by The Letting Partnership over a third (36%) of letting agents are not completely confident that their business could identify a fraudulent or suspicious client money transaction before funds are transferred.
The survey of letting agents in England commissioned by client accounting and compliance provider, The Letting Partnership, found that 35% have experienced or identified an attempted financial fraud or scam connected to their lettings activity within the last 12 months.
The findings come as the Government outlines plans for greater regulation of property agents, including letting agents, with the handling of client money and financial accountability among the issues attracting scrutiny.
The Letting Partnership believes the findings demonstrate why stronger financial safeguards, alongside professional qualifications and licensing, must form a central part of efforts to improve standards across the sector.
The research found that 54% of respondents believe that letting agents are now more exposed to financial fraud and scams than they were three years ago. Only 8% believed exposure has reduced.
“The fact that more than a third of letting agents aren’t completely confident in their ability to identify a suspicious client money transaction before funds are transferred should be a real concern, particularly when over a third have encountered attempted financial fraud in the last year alone.
“The emergence of AI-enabled fraud is making the threat increasingly sophisticated, and it’s telling that the industry already considers it the greatest financial security risk moving forward, despite more traditional forms of fraud remaining prevalent.
“With the Government now looking to strengthen regulation of property agents, there’s an opportunity to ensure that greater professional accountability is matched by stronger financial safeguards.
“Licensing and qualifications are important, but so too are the client accounting systems, verification procedures and financial controls that protect landlord and tenant money on a daily basis.”
Chris Mason, Chief Operating Officer, The Letting Partnership
Phishing and impersonation of landlords or tenants was the most encountered type of attempted fraud or suspicious financial activity, mentioned by 26% of respondents, proceeded by suspicious third-party rent payments (21%). By contrast AI-generated fraud, impersonation and deepfake scams ranked third, having already been encountered by 18% of respondents.
AI-enabled fraud was identified as the biggest financial security threat facing the sector going forward, selected by 29% of respondents. This placed it ahead of other more traditionally common scams such as tenant and payment fraud (27%) and money laundering or suspicious funds (12%).
While 64% of respondents expressed complete confidence in their business’s ability to identify a fraudulent or suspicious client money transaction before funds were transferred, 36% did not.
According to The Letting Partnership, the findings underline the importance of robust client accounting processes, payment verification procedures and financial oversight.
