Andrew Gillett, partner, Weightmans LLP

Detecting the sub-letters

15/01/2010

If they take the right measures, landlords can crack down on sub-letting

The Audit Commission - responsible for auditing the £200 billion spent by 11,000 local public bodies annually - recently recommended 15 ways for councils to maintain an effective counter-fraud strategy against recognised and emerging fraud risks.

In its report, Protecting the public purse: local government fighting fraud, the commission pinpoints three risk areas in which fraud has not been addressed adequately. Housing tenancy fraud is one of them, directly threatening the 3.8 million social homes in England. Illegal sub-letting is a key problem, particularly in city centres where private property letting charges far exceed comparable social accommodation charges.

Drawing on successes in three London boroughs where 274 fraud-hit properties were brought back into social use in just one year, several key characteristics were identified. These, along with the 15 points mentioned above, afford a 10-point checklist for social housing providers to tackle the problem:

Clear, cross-organisation commitment from housing associations to work alongside local authorities to prevent and detect tenancy fraud.
A greater recognition of the financial and human/social costs of fraud. Although the true social costs of those waiting to be accommodated cannot be measured, the actual annual financial cost can - and is estimated at £11,000 for a single family, with some 64,000 families housed in this way.
A high level of fraud awareness among all staff, and well-publicised policies in place which inform them of the steps they can take to notify the relevant bodies of any instances of fraud they encounter.
Publicity to raise public awareness and encourage members of the public to inform their local authorities about suspected fraudsters.
Regular tenancy audits to ensure that tenants are legitimate.
The engagement of (and reliance on) anti-fraud specialists.
Effective use of data matching and sharing opportunities, such as those provided by the National Fraud Initiative. The NFI matches electronic data within and between audited bodies to prevent fraud. To date, this initiative has identified an estimated £450 million of fraud.
Development and use of indicators to identify the potential risks of fraud occurring, such as a tenant’s repeated failure to provide access to a property for the purpose of electrical or gas inspections, for example.
Test existing safeguards using the Audit Commission’s 23-point governance checklist appending to the full report. This can be found on the Audit Commission’s website, and helps to make improvements where weakness have been identified.
Set clear targets and measure the performance of fraud teams.

With the correct measures in place, and the support of the government, there is potential to return as many as 50,000 properties to social use.

andrew.gillett@weightmans.com

Readers' comments (27)

kass | 20/01/2010 0:11 am
So it can be done then? I wonder what the usual suspects as Joe Halewood and Harry Lime and Sancho & co. will say now, after they've been bleating so harshly that it was an impossible task this is, uneconomic, etc. etc.
You can't believe how many times these self-indulgent professionals set out about an argument and conlcuding amongst themselves that they have won it, only for someone better expert than they are to come along some time later, like in this case, and demonstrate they were all espousing and expounding totally unfounded causes.
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karen | 20/01/2010 10:10 am
I think you'll find that that is the way the world works Kass. The greatest minds in the world thought that it was flat until a different mind realised it was round.

No one has said you can NEVER beat it and all of them stated that they'd love ideas in tackling the problem.

I love a solution as much as the next person.
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Joe Halewood | 20/01/2010 3:29 pm
Shame Kass doesnt get off his (her?) pontificating a**e and read the report.

I quote direct from paragraph 16:-

"One of these London boroughs increased the number of investigating
officers dedicated to preventing and detecting housing tenancy fraud, with
notable results. The borough recovered 43 illegally occupied properties
in 2006/07 with a team of just two investigating officers. In 2008/09, by
recruiting three more staff, twice as many properties (86) were recovered"

Whoopee!! 5 full-time members of staff to reclaim 86 properties in one year - You want to estimate that cost? 5 full time salaries and all necessary on and back office costs, legal fees - which are invariably the largest cost - (how convenient the writer above is from the legal profession and advocating this!!) etc, etc.

Yes it can be done but its one helluva cost at the expense of other council delivered services - even when many councils dont have any housing stock anymore! You want to try and write a proposal to councillors to spend say £500k per annum + on reclaiming social housing stock at the expense of other council services? Is this a mandatory duty on councils to so this - No its an option that has to compete with other competing options - an option that appears highly cost-ineffective to councils as the same councils get the HB they spend back in full from central government.

Unfortunately, these are the pragmatic matters ignorant buffoons conveniently ignore in their highly simplistic pontificating.

The same report discusses HB fraud and at 47: -

"47 In 2008/09, more than £18.5 billion housing and council tax benefit
was paid by councils in England. Latest official figures indicate that more
than £700 million was overpaid as a result of fraud or error of which over
£200 million was considered to be because of fraud"

I for one would rather have fraud teams looking at the £500m each council pays out in general error due to the ignorance and incompetence of HB staff - five-sevenths of all error or about 70 per cent is through incompetence - address that problem and the public purse saves much more - though Kass the £200m paid out to fraudulent tenants is something that must be part of the great landlord conspircacy mustnt it?

Perhaps though, if councils trained their staff in HB depts properly and avoided the £500m they pay out in error they could recycle some of this into sub-letting fraud?
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kass | 21/01/2010 11:26 am
"Joe Halewood | Wed, 20 Jan 2010 15:29 GMT...

I for one would rather have fraud teams looking at the £500m each council pays out in general error due to the ignorance and incompetence of HB staff - five-sevenths of all error or about 70 per cent is through incompetence - address that problem and the public purse saves much more - though Kass the £200m paid out to fraudulent tenants is something that must be part of the great landlord conspircacy mustnt it?"

You really live in another world and you have understood nothing about social landlords. They would rather pursue a hopleless case against a single tenant for few quids to ever admit or investigate all the millions they lose through internal frauds or imcompetence and maladministration - they are not going to do anything whose findings would make their own directors and executives guilty are they? Only rarely some of this truth emerges. If this way of operating does not amount to conspiracy, what else it is?
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Joe Halewood | 22/01/2010 11:18 am
Kass, you are right I do live in a different world to you. Mine is called reality.

You constantly berate landlords yet the points i made above were and are about councils, not landlords, and in particular council HB departments. So even the few councils that retain housing are not who I was talking about above.
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Amelia Nixon | 22/01/2010 12:49 pm
Detecting sub letters is simple. Just put a rent statement through the post box requesting that the tenant gets back by a certain date. If they get back to you then arrange an appointment at the address and ask to see bills in their name. tell them that you will be back every so often. Ask pertinent questions such as when did you apply for housing, when did you move in as
If they do not get back drop another rent statement to the occupier making a request for them to contact you, making it clear that you are the landlord. If no response send another to say you are applying for possession. And ask neighbours. You will pick up properties that have been abandoned. A lot of pain could be avoided if HA's and councils only took photographs of tenants at sign up.
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Harry Lime | 22/01/2010 3:13 pm
I absolutely agree that photo's should be taken at sign up, let the "human rights" protests commence........
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kass | 22/01/2010 3:53 pm
Harry Lime | Fri, 22 Jan 2010 15:13 GMT

Spending time taking, archiving and updating their photos is the solution then? And can a tenant wear a turban in his photo or a muslim headscarf? Would not we need also to renew our tenancies every 5 years like we do with passports?
Is this your idea to have social landlords extending their powers on residents's lives from being policeman to also include Home and Foreign Office duties?
I can see that making workable for Housing Officers to keep a periodic human contact with their patch tenants is definitely out of the question.
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kass | 22/01/2010 4:06 pm
"Joe Halewood | Fri, 22 Jan 2010 11:18 GMT

You constantly berate landlords yet the points i made above were and are about councils, not landlords, and in particular council HB departments. So even the few councils that retain housing are not who I was talking about above. "

To date I was not aware of any social landlords (including councils) who do not have any social housing. But if you say that social landlords without any social housing properties do exist, who am I to argue your profundities.
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john souray | 22/01/2010 4:07 pm
I’m too tired to argue about human rights, but I can’t help observing how astonishing it is that so many amateur policymakers on this site think that there are “simple” (or perhaps “simples”) solutions to problems that have dogged social housing for decades, if only someone had the wisdom to listen to their bluff and robust commonsense.

Never mind human rights; the idea of photographing tenants is unlikely to work. It would only work if the standard model of illegal subletting was that a sublet property was occupied by someone posing as the actual tenant (i.e. adopting their name etc.). This is only likely to be a minority of cases.

The problem is that like it or not (and I’m well aware that many of the peevish petit bourgeois moralists on this site don’t like it) a social housing tenant has all the rights to occupation any other property occupier has. That means they can have whoever they like to stay - relative, friend, lover, acquaintance - for as long as they like without having to tell the landlord anything, and certainly without photographing them. They can even leave that guest in sole occupation of the property, as long as they have a legitimate reason to be away and intention to return and do not set up a subletting relationship (by accepting rent for example).

Those are the thorny evidence issues, not what the person who happens to answer the door looks like.
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