When you own a property that you want to rent out, one of the crucial steps is to check the tenant file. This can be a complex process, involving numerous checks. This way, you ensure that you're renting your property to someone you can trust. In this article, we'll discuss how to prevent tenant file fraud in France.
Risks of rental fraud
When it comes to renting out your property, caution is the watchword. The first step for landlords is to check the tenant's file. However, this step should not be taken lightly, as it is subject to various risks of rental fraud. Let's take a look at the most common types of fraud that landlords may encounter when examining tenant files in France.
False rental file
Fraudsters may try to deceive landlords by providing false rental records. This may include forged identification, altered bank statements or doctored pay slips. They hope to conceal their true identity or background.
To avoid falling into this trap, it's imperative to conduct a thorough check of the documents provided by the tenant. Examine each piece carefully and make sure it's genuine. Check the national identity card or passport to make sure it's valid and that the photos match. Check bank statements for inconsistencies. Ask for additional supporting documents if in doubt. What documents should I request from a potential tenant? Here's what you're legally entitled to ask for when checking a tenant's file.
Valid identification :
- French or foreign identity card (with photo).
- French or foreign passport (with photo).
- French or foreign driving license (with photo).
- Temporary residence permit.
- Resident's card.
- EU nationality certificate or card.
Proof of address :
- 3 last rent receipts or, if necessary, a certificate from the previous owner (or his representative) stating that the tenant is up to date with his rent and service charges.
- Affidavit from the host stating that the applicant is living at home.
- Certificate of election of domicile.
- Last property tax notice or, if necessary, title deed for principal residence.
1 or more proofs of employment :
- Employment contract or internship agreement or, if necessary, certificate from the employer specifying the job and proposed remuneration, the planned start date and, if necessary, the length of the probationary period.
- Student card or certificate of enrolment for the current year.
- Copy of business card (liberal professions).
- Copy ofInsee identification certificate: Insee: Institut national de la statistique et des études économiques with identification numbers (self-employed).
- Original D1 extract from trade register less than 3 months old (craftsman).
- Extract K or K bis from the trade and companies register less than 3 months old (commercial companies).
- Recent proof of professional activity (other cases).
One or more proofs of income :
- Last 3 pay slips.
- Proof of payment of internship allowance.
- Last 2 balance sheets or, if necessary, a statement of income for the current financial year issued by an accountant (non-salaried).
- Proof of payment of indemnities, pensions, social and family benefits and allowances received over the last 3 months or proof of entitlement issued by the paying agency (pension fund, Caf: Caisse d'allocations familiales...).
- Title deed to a property or latest property tax notice.
- Notice of award of scholarship (scholarship student).
- Proof of income from property, life annuities or securities.
- Attestation de simulation pour les aides au logement établie par la Caf: Caf : Caisse d'allocations familiales ou par la MSA: MSA : Mutualité sociale agricole ou par le locataire.
- Last or penultimate tax assessment. When all or part of the income received has not been taxed in France, the last or penultimate equivalent document issued by the tax authorities of the state or territory concerned must be provided.
False references
Another common ploy is to provide false references. Dishonest tenants may name fictitious people as professional or personal references. In this way, they aim to appear more reliable in the eyes of the landlord. They may even ask friends or accomplices to act as false references.
To counter this tactic, take the time to check the references provided. Contact the people mentioned and ask specific questions to verify their authenticity. In-depth conversations can often reveal clues as to whether references are misleading. These references can tip the balance in the final choice of a tenant file verification procedure. Take your time to select the right file.
Financial fraud
Fraudsters may also try to deceive homeowners about their financial situation. They may provide forged pay slips, false CDIs, or even false tax returns. In this way, they are able to disguise their true economic situation. The aim of this deception is to obtain a rental contract without disclosing the risk of unpaid rent.
To properly assess a prospective tenant's creditworthiness, ask for authentic pay slips. Take a close look at the latest tax returns.
By identifying these common rental fraud risks, you'll be better prepared to prevent them and protect your property from ill-intentioned tenants.
The consequences of fraud
A careful tenant file check is not just an administrative formality. It's essential to protect your real estate investment. If you neglect this crucial step and fall into the trap of fraudsters, the consequences can be serious and costly.
Exposure to the risk of rental fraud can lead to a variety of problems for landlords. These range from financial inconvenience to legal disputes. Here's an overview of the consequences you could face if fraud occurs in your rental process.
Late payments
One of the most common consequences of rental fraud is late payment of rent. A tenant who obtains accommodation under false pretences may find himself or herself in a situation where the rent is too high. This can result in significant financial losses. Late payment can also lead to tension and conflict with the tenant.
It can be difficult for landlords to cope with more than one unpaid rent. Unpaid rent insurance can be an ideal solution. It must be taken out before the lease is signed by the landlord and tenant. The insurance company can then impose its opinion on the choice of tenant.
Adding a guarantor to the lease contract also increases your security against unpaid rent.
Property damage
Bad tenants can also cause damage to the property. When they know they've obtained the property fraudulently, they may be less inclined to take care of your property. Property damage, deterioration or neglect can occur, increasing your repair costs.
Don't hesitate to ask for a security deposit to ensure your safety in the event of damage. How much security deposit should I ask a tenant for? An amount equivalent to a rent receipt is the general rule. The law allows you to claim the following maximum amounts:
- For unfurnished dwellings, the legal maximum is set at 1 month's rent excluding charges.
- For furnished rentals, you can ask for up to 2 times the amount of rent excluding charges.
In order to prove any damage caused by the tenant, and to avoid any disputes, an inventory of fixtures must be carried out on arrival, in the presence of the future tenant. The same inventory of fixtures can be carried out at the end of the lease, to estimate the cost of potential damage.
Legal disputes
In the event of proven fraud, you could find yourself in legal disputes with the fraudulent tenant. This may involve:
- Eviction proceedings while the lease is still in force.
- Prosecution for non-payment of rent.
- Accusations of falsification of documents.
Legal disputes are often lengthy and costly, causing additional stress for homeowners.
Impact on investment profitability
Rental fraud can also have a long-term impact on the profitability of your property investment. In particular, the costs associated with late payments, repairs and litigation can significantly reduce your property's returns. What's more, extended periods of vacancy due to eviction can also result in significant financial losses.
It's crucial to understand that fraud prevention in the rental process is not just an administrative concern. It's also an essential strategy for protecting your financial and legal interests as a rental agency and as a landlord. Vigilance in tenant screening can help you avoid these undesirable consequences.
Using AI to check tenant files
Artificial intelligence (AI) has revolutionized many areas, including tenant identity verification. In this section, we'll explore in detail how AI can be a valuable asset in strengthening the leasing process.
Automated document analysis
One of the most powerful applications of AI in identity verification is automated document analysis. AI-based software can scrutinize tenant-provided documents such as ID cards or passports.
These systems can detect anomalies, irregularities or inconsistencies that could indicate false documents. For example, they can check the match between the photo on the ID and the tenant's face using advanced facial recognition techniques.
Comparison with reliable sources
AI can also compare the information provided by the tenant with reliable sources. For example, software can verify the validity of an ID document by comparing it with a government database or recognized authentication source.
What's more, they can check that the bank statements match the information provided by the tenant's bank, which reinforces the reliability of the financial audit.
Detecting forgeries
Fraudsters may be skilled at forging documents, but AI can spot subtle forgeries. It can identify alterations in scanned images, detect altered signatures, or even spot anomalies in barcodes.
Process automation
One of the major benefits of AI in identity verification is the automation of the process. Landlords, and especially rental agencies, can save time and effort by using automated solutions. These carry out all the painstaking checks in a matter of moments.
By incorporating AI into your tenant identity verification, you greatly enhance your ability to detect rental record fraud. Not only are these systems accurate, they're also effective at speeding up the verification process, which can be essential in a competitive real estate market.
Datakeen's analysis of official documents is based on several factors:
- Consistency of the file: i.e. a precise and thorough check of all information between the identity document, proof of residence and pay slips.
- Document authenticity: We use authenticated checkpoints to verify official documents. Every detail is scrutinized to ensure that documents are genuine.
- Photo verification: If you're signing remotely, we can help you verify the identity of the prospective tenant. We check a photo taken on the spot against the one on the identity documents.
Our identity and document checks comply with the standards required by banks, insurance companies and international KYC-AML regulations.
The importance of automation in fraud prevention
Automation plays a key role in preventing rental fraud. In this chapter, we'll look at how automation can simplify and strengthen the tenant verification process, while minimizing human error.
Reduce human error
One of the main reasons why automation is crucial to fraud prevention is that it reduces human error. When it comes to scrutinizing documents, it's easy to miss important details or be fooled by forgeries. Automated systems, such as AI software and LLMs (Learning Language Models), are programmed to be accurate and exhaustive, guaranteeing reliable verification.
Process acceleration
Automation also speeds up the verification process. Whereas manual checks can be time-consuming, automated systems can analyze documents in a matter of moments. This means that letting agencies (or landlords) can make decisions more quickly, which is essential in a competitive property market.
Handling large amounts of data
When it comes to managing multiple tenant applicants, automation is essential for handling large amounts of data. Landlords can review documents from multiple applicants simultaneously, simplifying the management of their rental process. Inconsistencies and falsifications can be detected more efficiently. Rental agencies, on the other hand, can process several files at the same time.
Alert notifications
Automated systems can also generate alert notifications when suspicious documents are detected. For example, if an LLM spots a suspicious element in a document, it can trigger an alert for the owner to take a closer look. This enables rapid intervention in the event of potential fraud. Rental agencies can use this tenant file check alert system to improve their efficiency.
Consistency and uniformity
Automation also ensures consistency and uniformity in the verification process. Every prospective tenant is subject to the same authentication criteria, eliminating any unequal treatment. This reinforces transparency and fairness in the rental process.
Automation is an invaluable asset in the prevention of rental fraud. It reduces errors, speeds up the process, enables large amounts of data to be processed and ensures consistency in tenant verification. Savvy landlords take advantage of these benefits to protect their assets and ensure hassle-free rentals.
The evolution of rental policies thanks to new technologies
The introduction of new technologies, such as artificial intelligence (AI) and generative language models (LLMs), has profoundly influenced leasing policies. In this chapter, we explore how these innovations have reshaped the way property owners and managers approach the leasing process.
Enhanced safety
One of the most striking developments is the enhanced security in the rental process. Thanks to AI and LLM, landlords and rental agencies can now conduct more rigorous identity checks and document authentication. This significantly reduces the risk of fraud linked to rental files, and boosts landlords' confidence.
Objective decision-making
New technologies enable landlords to make more objective rental decisions. These automated systems are unbiased, eliminating any potential bias in the tenant selection process. Decisions are based on clear and transparent criteria, ensuring a fair rental policy.
Enhanced responsiveness
Automation also means greater responsiveness. Landlords can analyze applications more quickly, which is essential to meet the needs of the ever-changing real estate market. As a result, prospective tenants also benefit from rapid responses to their inquiries.
Cost reduction
New technologies enable landlords to reduce rental management costs. Automated systems are efficient and eliminate human error. This reduces the expense of disputes, late payments and repairs caused by malicious tenants.
Adaptability to legislative changes
Landlords can also better adapt to changes in legislation thanks to new technologies. Indeed, such automated systems can be quickly updated to comply with new rental regulations. This ensures that landlords remain compliant.
Conclusion
The tenant file check is a crucial step for landlords and property managers wishing to ensure the reliability of their tenants while protecting their investments. New technologies, including artificial intelligence (AI) and generative language models (GLM), have radically transformed the way we approach preventing rental fraud and securing the rental process.
Thanks to these technological advances, the risks of rental fraud, such as the presentation of false rental files or references, are better controlled. Automated systems guarantee meticulous document verification and accurate authentication of documents provided by prospective tenants. This automation also reduces human error, speeds up application processing and ensures consistency in the tenant selection process.
