The phantom rental property scam

Watch out for this new scam sweeping the country or you could end up thousands of pounds out of pocket.

February has been the Office of Fair Trading's Scamnesty month, focused on scam awareness. Today, I'm going to flag up a scam that's affecting hundreds of would-be tenants up and down the country.

I'm also going to explain how to stay safe when searching for property online.

Money transfer alarm bells

Citizens Advice is warning people to keep their wits about them when searching for rooms or property online. If you're asked to 'prove funds' via money transfer before you view a property, great big alarm bells should start ringing.

Here's how the scam works: Bogus landlords (who often state that they live abroad) ask prospective tenants to make a 'secure' money transfer to a trusted person (for example to their partner or close friend).

The prospective tenant is then asked to send a copy of the receipt to the landlord, to prove they have enough money to cover the deposit and rent before they are shown the property.

You haven't actually transferred the money to the landlord - you've transferred it to someone you trust - so no one dodgy can make off with your funds, right?

Wrong. When would-be tenants go to collect their cash from the money transfer firm they've used, they're told that the money has already been withdrawn.

Oh, and of course - the room or property doesn't exist.

How to stay safe

Moving cash using a money transfer company isn't the same as transferring money from one bank to another: It isn't covered by the same consumer safeguards.

You should never use money transfer as a way to 'prove' funds, or as a method of payment to someone you don't know. As Citizens Advice puts it, revealing your money transfer number or a copy of your transfer receipt is like "handing over your PIN number to a stranger".

A legitimate landlord should be satisfied with references from previous landlords and/or employers. If he or she wants cash 'proof' instead - before you've even viewed the property - walk away!

Here are some other top security tips when searching for a rental property online:

1. If at all possible, meet the landlord in person. Never hand over any money until you've thoroughly read through a written contract.

2. Do a Land Registry check to confirm that the person who claims to own the building in question actually does.

3. All landlords must now be part of a registered Tenancy Deposit Scheme which protects your deposit. To gauge whether a landlord is legitimate, ask which scheme he or she is registered with - and check that what you've been told is true.

4. If you're not comfortable looking for a rental property online, use a reputable high street letting agent instead.

Agencies belonging to the National Approved Letting Scheme (NALS) adhere to a set of standards which include a complaints procedure; so use make sure the agent you use is a member.

If you've been affected by a rental scam

If you become the victim of a rental scam, there are several steps you can take:

• If a money transfer company was involved in the transaction, let it know immediately.

• Report the scam to the National Fraud Authority. It's Action Fraud line number is 0300 123 2040. Alternatively, you could report it at your local police station.

• If a trader is involved, report them to Consumer Direct.

• You can also get advice on what to do next from your local Citizens Advice Bureau.

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