30 | Inside Housing | 00 Month 201530 | Inside Housing | 11 December 2015

IN ASSOCIATION WITH BBFI

More than one in four social landlords are cur-rently approving Right to Buy property pur-chases without validat-

ing applications – while more than half of housing professionals estimate the inci-dence of fraud to be higher than previ-ously thought. These are just two of the headline findings of an exclusive Inside Housing Right to Buy fraud survey – spon-sored by corporate investigators BBFI – that casts a spotlight on the dark side of the Conservative housing initiative launched by the late Margaret Thatcher in the 1980s.

The national survey comes in the wake of two groundbreaking reports that have charted a spike in fraud. In October 2014, the Audit Commission reported a 400% rise in Right to Buy fraud in the capital between April 2012 and March 2014, while in July this year the London Bor-oughs’ Fraud Investigators’ Group (LBFIG) found that 3% of Right to Buy applications made each year in the capital were fraudulent.

But the findings also come as the scheme is about to be extended to 1.3m housing association tenants countrywide as heralded by chancellor George Osborne in his Autumn Statement. As such, hundreds of housing associations that have never run the scheme before will now face this type of fraud for the very first time.

Assessing riskThe 215 respondents surveyed hailed from diverse housing disciplines includ-ing care and support, regeneration, pro-curement and housing management. The majority (70%) worked for housing asso-ciations, with the remainder from local

The survey findings reveal the multi-plicity of screening approaches used by social landlords. The majority (66.7%) of organisations screen 90%-100% of appli-cations – but 16% of landlords investigate less than half of applications, and 2.3% of respondents work in organisations that probe a maximum of 10%.

The findings also highlight a chasm between identified and perceived levels of Right to Buy fraud – with the level of perceived fraud far higher than previously thought.

Some 60% of respondents said identi-fied fraud ran at between 0%-2% of appli-cations, 30% at 2%-10%, while just 1.3% of respondents claimed fraud affected more than half of applications.

But asked to estimate the incidence of actual fraud, the majority (50.6%) of respondents said it ran at anywhere between 2% and 25% of applications.

Karen Neald, solicitor at law firm Weightmans, said this was likely to be in part due to regional variations in prop-erty values that make fraud more attrac-tive in high-value areas such as London.

While many respondents perceived they were failing to identify fraud, 73% of

authorities (18.5%) and arm’s-length man-agement organisations (11.5%). (Stock transfer housing associations already have some experience of this policy, as their tenants are often eligible for the ‘preserved Right to Buy’.)

According to Paul Slowey, who founded BBFI in 2008, Right to Buy fraud has esca-lated as house prices have soared, with property discounts – £103,900 in London or £77,900 countrywide – increasingly attractive to fraudsters.

“Every 20 fraudulent applications approved by landlords in the capital equates to a loss of £2m from the sector,” says Mr Slowey. “With the scheme being extended, even the accepted level of fraud could see millions of pounds of social housing being bought up by fraud-sters. But we believe the problem is greater, and that the results of this survey underpin that.

“Some landlords are inadvertently leaving the door open to fraud by failing to fully screen applications,” says Mr Slowey. “Others estimate the actual level of fraud to be far higher than they are currently managing to identify.”

That more than one in four social land-lords (27%) nationally are currently approving Right to Buy property pur-chases without screening the ‘validity of applications’ – such as checking the appli-cant is the actual tenant, or that the money to purchase is their own, or from an approved source – is “deeply concerning”, Mr Slowey says.

Alan Bryce, author of the LBFIG report, says: “Robust validation is the key to rebuffing fraud. I’m not that surprised that one in four do not have a robust sys-tem in place. This is not a box-ticking exercise, but a risk-based investigation – you need fraud specialists.”

A new survey sheds light on the quality of the sector’s fraud checks.

Steve Sampson investigates

The fraudwatch

“Some landlords are inadvertently leaving the door open to fraud.”Paul Slowey, founder of BBFI

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00 Month 2015 | Inside Housing | 3111 December 2015 | Inside Housing | 31

IN ASSOCIATION WITH BBFI SURVEY

In association with:

Does your organisation investigate the validity of Right to Buy applications?

Source: Inside Housing and BBFI survey

NOYES

respondents believed there was a link between the incidence of fraudulent Right to Buy applications and general tenancy abuse, such as sub-letting.

According to Mr Slowey, this is an essen-tial link to make. “From our experience, where someone has abused a tenancy, any Right to Buy application warrants investigation, as there appears to be a direct link in a high percentage of cases.”

Cost to communitiesBut do social landlords think they will be able to cope with a sudden uptick in applications? The survey probed respondents on two levels.

First it asked respondents if organisa-tions would be able to cope with the sheer volume of applications expected once the scheme was open to an addi-tional 1.3m tenants.

Nearly 60% of respondents said they were either “quite” or “very” confident they could. But the remaining 40% were either “not very” or “not at all” confi-dent, or, in the case of 7%, “not be able to” cope.

Respondents were then asked if they could cope with validating applications –

However, more than 35% were either “not very” or “not at all” confident, with around 10% saying that they would “not be able to” cope.

But housing experts said the high lev-els of confidence among social landlords reflected the work they were putting in in advance of the scheme’s extension.

Responding to the findings, Catherine Ryder, policy advisor at the National Housing Federation, insisted housing associations are committed to ensuring, as far as possible, that all Right to Buy sales are genuine. “We have an opportu-nity to learn from the current Right to Buy scheme and ensure the application and sales process is as robust as possible,” she adds.

The findings of this survey suggest such measures will be vital if landlords are to fend off the spectre of fraud. ■

“We have an opportunity to learn from the current Right to Buy scheme.”Catherine Ryder, policy advisor, National Housing Federation

such as investigating addresses linked to applicants, outstanding loans and entries on the electoral register.

When the workload in validating appli-cations was outlined, confidence levels fell. Some 53.9% of respondents said they were either “quite” or “very” confident.

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