Rental Application Fraud Costs Landlords Millions

Add one more problem to the challenges facing some apartment owners and managers: tenants who lie on their rental applications.

Responding to a survey conducted by the National Multifamily Housing Council between November 15, 2023 and January 9, 2024, 93.3% of owners/managers said they had experienced fraud in the past year – and that the level was on average 40.4% higher than the prior year. One of the most common types of fraud was fake or falsified pay stubs, employment references or other forms of income documentation, reported by more than 84% of respondents.

Misrepresenting information on applications came second, followed by identity theft, unauthorized cohabitants or sublets, and fraudulent checks.

Two-thirds of respondents said some locations appear to be more prone to fraud in applications and payments. Almost half of this group identified Atlanta as the worst offender, followed by Texas and Florida.

Landlords said fraudulent applications and subsequent failure to pay rent accounted for 24% of their eviction filings, with the same three locations responsible for many of them.

Unsurprisingly, such fraud hit landlords in the pocketbook. Respondents reported they were forced to write off an average of $4.2 million – with a median of $800,000 — in bad debt during the year. They blamed 25% of this on nonpayment of rent due to fraud. However, 73% said part of the nonpayment was due to the eviction moratorium imposed when the Covid pandemic struck.