The New Housing Fraud Legislation

ROBERT DARBYSHIRERICHARD PRICE

9 ST JOHN STREET

Examples of Housing Fraud

• Not telling the truth when applying for a property e.g. Claiming to have children when you don’t

• Sub-letting your property without permission• Living in a property after someone has died

without the right to do so

Source: “Council House Fraud” from GOV.UK

Examples of Housing Fraud

• Other examples?• Succession rights• Non-occupancy• Unauthorised exchanges• Prevention of Social Housing Fraud Act 2013

Prevention of Social Housing Fraud Act 2013

• Ss 1-3 : Unlawful sub-letting is a crime, prosecutable by the local authority, in secure and assured tenancies

• Ss 4-5 “Unlawful profits” can be ordered to be repaid to the landlord in civil or criminal proceedings

• S6 Assured tenancies lose their assured status

Ss 1-3 is more detail

• S1(1) – creates a crime re secure tenancies• Where T sublets or parts with possession of

part or whole without consent in writing• And T ceases to occupy as only or principal• And T is aware this is a breach of tenancy

Ss 1-3 is more detail

• S1(2) – creates a crime• Where T dishonestly sublets or parts with

possession of part or whole without consent in writing

• And T ceases to occupy as only or principal• And T is aware this is a breach of tenancy

Defences 1(3) &1(4)

• No crime if T so acts because of violence or a threat of violence against him or a member of his family

• No crime if occupant is entitled to apply for a right to occupy or to have tenancy transferred

Penalties

• For 1(1) fine of up to £10,000• For 1(2) 2 years in Crown Court, 6 months in

magistrates

Section 2

• An offence in identical terms for assured tenancies granted by social landlords

Section 3: Limitation

• Prosecution must be brought within 6 months of knowledge of the offence coming to the prosecutor

• And in any event, within 3 years of commission of the offence

Section 4: Unlawful profit orders - Crime

• Must be considered upon conviction• Requires profits to be paid to L• If not made, reasons must be given• Can be ordered in addition to a fine

Section 5: Unlawful profit orders - Civil

• Requires sub-letting or parting with possession in breach of tenancy agreement

• And that T no longer occupies as only or principal

• Can be recovered “on application”• Applies to assured and secure tenancies

Section 6: Loss of assured status

• Applies where T parts with possession or sublets entirety of premises…

• in breach of tenancy agreement• Automatically, assured status is removed

Detecting Fraud

• Credit checks• Land Registry searches• Residence checks• Use or introduce further checks scheme pre-

tenancy?

Recommended Steps

• All landlords should ascertain the level of unlawful occupation in their stock.

• More local authorities should provide a fraud investigatory service to housing associations in return for nomination rights to homes recovered

• Registered providers of social housing should have robust internal audit processes in place to detect possible fraudulent or corrupt actions by staff.

• Local authorities should consider photographing tenants at allocation and existing tenants at tenancy audits.

• Local authorities should consider the balance of the resources they allocate to housing benefit and housing tenancy fraud.

• A consistent best practice tenancy audit checklist and training needs to be devised to show how these can be carried out effectively.

• The Government should consider further incentivising local authorities and registered providers to investigate and recover unlawfully sublet properties.

• Registered providers and councils should commit to joint working and there should be political and managerial commitment to the recovery of unlawfully sub-let properties.

• Housing tenancy fraud is not restricted to London and work needs to be done to promote investigations outside London

• Source: House of Commons Library Ref: SN/SP/6378

Is it necessary to rely on fraud?

• What are you trying to achieve?• What are the consequences of alleging fraud?– For the Claimant– For the Defendant–Burden of proof generally

• What is the Court’s approach to fraud claims?–Do judges like them?

The Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014

• Now in force• Allow approved officers of a local authority

power to require information from…• banks; credit businesses; water and sewage

undertakers; gas electricity and telecommunications suppliers

• Information must be “relevant” to a fraud investigation

Bring a claim

• Under the Housing Act– Do you need to rely on fraud at all?

• Under the Prevention of Social Housing Fraud Act– No dishonesty offences– Dishonesty offences– Civil unlawful profit orders

DISCUSSION