Wednesday, 06 May 2015

Right to buy changes risk increase in fraud

Fraudsters are targeting the government’s revitalised right to buy programme, a report from the Audit Commission has revealed.

The number of right to buy fraud cases has risen by 52 per cent in the last three years and the commission warns that the newly extended discounts pose an increased risk of fraud.

In April the government increased the maximum discounts on right to buy properties to £75,000 and since then councils have been inundated with applications from tenants.

The report Protecting the public purse 2012 said that right to buy fraud is a ‘new emerging fraud’ and that although the level is currently relatively low – in 2011/12 there were 38 cases with a value of £1.2 million – the increased discount would make the scheme ‘more attractive to fraudsters’.

It warned that ‘social housing providers should ensure their right to buy fraud defences can respond to this increased risk’.

Right to buy fraud is commonly when people provide false identification when making an application or a householder applies for a discount when they are not eligible.

The report, published today, revealed that overall, councils are becoming better at cracking down on tenancy fraud.

Fraud was down 3 per cent on last year from £185 million to £179 million which the report attributed to improved detection by councils.

More than half of this – 124,000 cases totalling £117 million - came from housing and council tax benefits.

Councils recovered around 1,800 homes with a total replacement value of nearly £264 million last year – which was broadly the same as the previous year. However, since 2008/09 the number of properties recovered from tenancy fraudsters has risen by 82 per cent.

The report shows 69 per cent of all recovered properties last year were in London despite only 27 per cent of council housing being in the capital. This is because many London councils work with housing associations to tackle fraud.

More than half of non-London councils did not recover a single property last year.

The report recommended that the Communities and Local Government department incentivises social landlords to tackle fraud.

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