"The industry must act decisively, embracing intelligent, proactive solutions to stay ahead of increasingly sophisticated threats."
Identity fraud in UK real estate is rising at an alarming rate, with 70% of professionals reporting an increase in cases over the past year. Yet despite this surge, only 14% regularly report incidents to the authorities. This discrepancy reveals a troubling lack of enforcement and accountability in the sector.
However, technology is offering a powerful counteroffensive. According to new research, 65% of real estate companies are now relying on digital or automated tools to detect fraud. The sector is undergoing a clear shift away from manual checks and towards smarter, tech-led prevention.
Digital ID verification is proving to be one of the most effective defences, not only catching fraud but improving the process for customers. Still, with over half of professionals admitting to rarely escalating fraud cases, the broader response system remains vulnerable. The industry must act decisively, embracing intelligent, proactive solutions to stay ahead of increasingly sophisticated threats.
The sharp rise in identity fraud across UK real estate
The growing volume of digital transactions and remote processes, coupled with rising housing demand and gaps in identity verification (IDV) processes, has created a real estate environment ripe for fraud. Concurrently, as public tech literacy continues to grow and digital tools like AI become more sophisticated, bad actors are making identity fraud appear far more authentic.
When it comes to renting apartments or selling property, for example, fraudsters are using false applications and proof of funds to give off the impression they are financially secure. A supposedly ‘legitimate’ renter or buyer may falsify bank statements or payslips, falsely claim ownership of assets, or adopt the identity of someone else through a fake ID to secure the property (sometimes to launder money or conceal the true buyer’s identity).
Likewise, similar techniques can be used to fake titles. A fraudster may steal an identity and forge documents like mortgage deeds in an attempt to pose as the property owner. Under this guise, they can sell or remortgage the property without the legitimate owner's knowledge if buyers, real estate agents and solicitors do not spot the identity theft.
The role of digital compliance checks in the frontline defence
One way around these issues is open banking. Open banking provides real-time, secure access to an applicant’s bank account data. This enables firms to instantly gather ‘tamper-proof’ proof of funds and reduce their reliance on easy-to-forge documents like PDFs or third-party references. What’s more, by linking financial activity to the actual account holder, it offers more concrete identity verification.
Open banking APIs and modules can be integrated into advanced digital customer due diligence systems, which can act as the frontline of defence against fraud. These holistic systems combine biometric recognition, document authentication and behavioural analysis capabilities to perform KYC/AML checks and verify the identity of the person making a rental application or looking to sell their property.
As the checks take place in real time, real estate firms can stop fraudulent activity in its tracks before it happens while seamlessly adhering to their compliance requirements. By simplifying the process but increasing its effectiveness, in turn, this increases the likelihood that a firm will spot and report an incident to regulators. Above all, this can save firms from the ire of financial and reputational damage that follows cases of fraud taking place.
The need for improved industry standards
Technology forms an integral line of defence against identity fraud. But its effectiveness is also tied to industry regulations and how these are implemented across the sector. Part of the reason incidents can go unreported is due to regulatory complexity or a lack of consistency; there can be discrepancies between when checks need to be carried out. Recently introduced OFSI regulations, for example, now subject all letting agents to financial sanctions reporting, but current AML regulations only include those who collect monthly rents over €10,000 (£8,570).
We’re also at a crossroads with the initial rollout of digital IDs by the government, with documents like driving licences turning digital later this year. How these align with the HM Land Registry’s ‘Safe Harbour’ guidance, for example (which requires conveyancers to verify the cryptographic chip in ePassports), will be essential to their progress.
Broader regulatory and financial support for real estate firms, especially smaller or independent agencies and conveyancers, to access IDV technologies can help them to modernise for these advancements and integrate capabilities like open banking and biometric verification.
Moreover, with so many digital transactions occurring every day, cross-sector collaboration and data sharing between agents, conveyancers, government bodies, tech providers and regulators is paramount to understanding the types of fraud taking place and how best to combat them.
And this illustrates a fundamental point: it also just comes down to awareness. If property firms, agents or landlords do not understand the scale of the problem, the nature of fraud risks or red flags on the market, then they won’t be in a position to adequately verify identities.
Turning the tIDe
Identity fraud is increasingly on the attack; fake identities, applications and proof of funds present an array of hazards in the housing market. But despite the growing dangers, there is a significant shortfall in the number of incidents being reported to authorities, even as more digital tools are adopted by real estate companies to identify fraud.
This signifies that fraud is becoming more complex, harder to detect, and that more advanced technology is required to counteract its attacks, and from open banking to biometric recognition, the latest IDV platforms are providing this line of defence.
Yet while such tools are turning the tide in compliance’s favour, it’s imperative that industry standards evolve quickly enough to provide a consistent, sector-wide approach to identity fraud prevention. That way, IDV defence can truly be turned into an attack.
