Social housing fraud will become a criminal offence from today, after a new law came into force. The Prevention of Social Housing Fraud Act was passed on 31 January which enables councils to press for unlimited fines or a maximum of two years imprisonment in extreme cases of fraud. Before the passing of the Act, sub-letting council property fraudulently was a civil matter
The Act gives the courts the power to recoup any profit the tenant has made from illegally subletting the property and allows investigators to demand data from banks and utility companies to prove fraud. Before the councils could only request data
With an average of 1.7 million households on the housing waiting list; more than 50,000 homes unlawfully sublet; some 245,000 social households classified as overcrowded; and the costs of keeping homeless families in temporary accommodation averaging at £17,500 per annum, fraudulent subletting is a problem for councils.
The Act creates two new criminal offences concerning the sub-letting of properties held under (a) secure tenancies and (b) assured tenancies granted by private registered providers (PRPs) or registered social landlords (RSLs). Assured shared ownership leases are excluded. The key feature distinguishing the offences is the tenant’s mens rea(guilty mind)..
The lesser offence is committed if the tenant ceases to occupy the property as his only or principal home and either sub-lets or parts with possession of it, or part of it, knowing that to be a breach of his tenancy agreement.
There are exceptions. Broadly, a tenant who does so because of violence or threats of violence made by a person living in the property or in the locality will not commit an offence. Nor will he do so if a person occupying the property because of his actions is entitled to apply for a right to occupy it, or to have the tenancy transferred to him, or a person in respect of whom such an application might be made. In practice, this is likely to include spouses, former spouses, civil partners, co-habitants and children for whose benefit the tenancy might be transferred.
The lesser offence carries a sentence of a fine not exceeding 5,000, the greater offence a sentence on summary conviction of up to six months in prison, a fine not exceeding 5,000 or both; and on indictment, up to two years in prison, a fine or both.
As an exception to the general rule the lesser, summary-only offence may be prosecuted within six months of the date on which the prosecutor became aware of evidence sufficient to warrant a prosecution, though not later than three years after the offence was committed, or the last day on which it was committed if it was a continuing offence.
Local authorities may prosecute both sub-letting and associated offences such as aiding or abetting an unlawful sub-letting. They can do so whether or not they are or were the landlord or the property is within the local authority’s area.
The greater offence is committed if the tenant acts not merely in knowing breach of his tenancy agreement but dishonestly. The elements of the greater and lesser offences are otherwise the same.
The G15 group of London’s largest housing associations is offering sub-letting tenants a two-month window in which they can return their keys with a promise that they will not face prosecution.