Thieves and charlatans in social housing

Ouch, these numbers hurt:

A fifth of all council house tenancies may be fraudulent, according to investigators who have conducted the first large-scale examination of the problem………

Fraud investigators matched 27,000 tenants – the entire tenant roll of two councils and four housing associations – against mortgage and credit databases.

They found \”indications of fraud\” – such as the tenants having mortgages, utility bills or active credit at other addresses – in 5,300 cases…………

HJK, which works for councils and housing associations performed the \”data-matching\” exercise with the 27,000 tenants using legal, publicly-held databases such as credit reference agencies and the Land Registry.

In 2,120 cases, 8 per cent of the total, HJK found \”red\” indicators of fraud, where the registered tenant had a mortgage, bank account, active credit or utility bills at another residential address.

In 3,180 cases, 12 per cent of the total, they found \”amber\” indicators of fraud – active credit, bank accounts, Sky TV or utility bill records held by a person with a different surname at the tenancy address, but no such activity there by the registered tenant.

And the importance of all this?

There are eight million council or housing association homes in England and 1.8 million households on the waiting list.

So, near enough, those people on the waiting list are matched by those in council housing who are already paying market rents to the dodgy characters who are subletting and pocketing the subsidy.

Or, we don\’t actually have a shortage of social housing at all. We\’ve got instead an excess of fraud in the social housing stock we already have.

No need at all to build more: just make sure that those getting the subsidy are those who are supposed to get the subsidy.

I will, of course, be fascinated to hear what the professional homeless crowd have to say about this.

This won\’t be an accurate number of course because London rents are higher than elsewhere but just to give an indication of the scale of the problem.

Last week, Shelina Akhtar, a councillor in the London borough of Tower Hamlets, admitted subletting her housing association property as she was convicted of £1100 in housing benefit fraud.

She paid a subsidised \”social rent\” of £400 a month, but lived in private accommodation elsewhere and charged her tenant £1000 a month.

£600 a month on 1.6 million properties. £1 billion a month, £12 billion a year. Yes, even in today\’s inflationary times that\’s real money.


25 thoughts on “Thieves and charlatans in social housing”

  1. Arguably good news.
    If we identify these people and take their subsidised housing off them we save £12 billion a year.
    We also fine each of them, say, £25,000, giving a windfall revenue of £40 billion. That is about a quarter of this years deficit. Excellent.

  2. “Last week, Shelina Akhtar, a councillor in the London borough of Tower Hamlets…”
    Any guesses as to which party she is a councillor for?

  3. @1 Alex

    & even better news. This doesn’t go on without the active connivance of housing allocation personnel in councils & housing associations & the councillors & council officers who give them covert support. There’s been a healthy market in snide tenancies for years & years.
    It’s not just investigation of the tenants that’s required but a good, hard look at how they got the tenancy in the first place. An outcome of a wave of summary dismissals with loss of compensation & prosecutions should save a considerable amount of public money & lead to the removal of some extremely bent public office holders.

  4. Depends on whether the subletter is charging the sublettee more than he is paying to the council or HA. Also, some proportion of subletees will qualify for council housing anyway, so it won’t be a straight drag and drop.

    Also, bankers justify benefit fraud, or something.

  5. JamesV: nice idea, but unlikely many subletters will qualify for council housing. You won’t be able to get HB on an illegal council sublet, so all the rent’ll be market value private rental, and there aren’t many people who rent private without HB and who’re eligible for the council list.

  6. Knew people 15 years ago who were the sub-tenants.

    Cash in hand rent, a few hassles with passing on letters from the Council, and of course you couldn’t call the Council when there was a problem, but cheap for London.

    Used to be how Northerners lived when they moved down to London to seek for the fabled pots of gold. I’m told it’s now where all the Poles are.

  7. It’s also, I believe, the cause of a lot of the statistical increase in single parent households.

    Stay officially separate, get two council houses, live together in one and rent out the other.

    On the councillors example you could clear £600 per month, cash in hand, tax free, whilst still claiming benefits.

  8. Surely the ultimate answer is not more enforcement (after all, the sub-tenants have to live somewhere), but to charge full market rent.

    That way there’d be no profit to be made from sub-letting.

    However you’d then get more housing benefit fraud, with people still doing the two-flats-per-couple trick, getting each paid for through housing benefit.

  9. I have a proposal for how to solve this problem.

    Make it a right for the subtenant to claim the actual tenant rights.

    I.e. current problem: Mr. A lives in a council house, paying £400 in rent. Then he moves together with Ms. B who also lives in a council house paying £500 in rent, but A keeps his old council house, and sub-lets it to Mr. C for £1000.

    Now, just make a law that allows Mr. C to fill in a form that tells that he is now actually the tenant because he lives there. He can reduce his rent from £1000 to £400, so he has a very good incentive to fill in that form, and the council apartments are utilized better.

    This is not a perfect solution, of course, because in this system, A and B may still decide to keep the other apartment, but at least the most outrageous exploitation of public resources is not used for private profit.

  10. Tim, if this was a randomised sample then the scale of the fraud is as extrapolated.
    But I suspect it’s not, and that selection was made on the basis of factors such as late rent payments, unpaid council tax, student’s absolved from paying council tax, complaints by neighbours, etc.

    The fraud is undoubtedly widespread. In London it is rife. In say Giro-chdale you won’t get much demand for expensive sub tenancies.

  11. On reflection & not in contradiction with my comment above, that data matching is going to be throwing up a different class of sub -letting that’s more excusable.
    Posit the case of a tenant who no longer needs a tenancy. Maybe moving in with a partner, elderly & moving in with a family member for care reasons, leaving the country, maybe even buying a house. In a case like this, the tenancy should be surrendered to the council or housing association & go back into the housing available for allocation pot. But ask yourself this question. You’re the existing tenant. You have family or friends who are in desperate need of affordable accommodation. Would you surrender the tenancy so that it may house an asylum seeker or recent immigrant, which it likely will? Or do you pass it over to your niece, her boyfriend & their young child who are struggling to pay for a private rental hovel without a prayer of ever getting enough points in the housing allocation lottery to qualify?
    Folk do tend to look after their own.

  12. How is the data matching done for the “red” indicators – how can they tell that a person with the same name as a registered tenant but at another address really is the same person? Until they’ve followed up these 2,120 cases and found out how many of them are genuine matches the number doesn’t tell us anything.

    It’s odd that there are more “amber” indicators than red, since the registered tenant has to be living somewhere.

  13. That does NOT demonstrate there is no shortage of Social Housing. The vast majority of illegal sub-tenants need Social Housing but are no longer on the waiting list.
    It *does* show where some of Ritchie’s “tax gap” arises ‘cos if you’re illegally sub-letting your Council House, what chance is there that you’ll voluntarily tell the taxman?
    @ bloke in spain 13 – yeah, except that the chance that it will go to an asylum seeker is zilch unless there is no-one else who will take it. New Labour dumped asylum seekers in empty council flats that no locals would take (that is why so many live in Glasgow and have to report in person to Croydon if the immigration department bureaucrat makes a typing error); your elderly widow probably reads the Daily Mail, so she naturally believes it and it takes a Thomas More-type character not to look after her family.

  14. i.e. current problem: Mr. A lives in a council house, paying £400 in rent. Then he moves together with Ms. B who also lives in a council house paying £500 in rent, but A keeps his old council house, and sub-lets it to Mr. C for £1000.

    Now, just make a law that allows Mr. C to fill in a form that tells that he is now actually the tenant because he lives there. He can reduce his rent from £1000 to £400, so he has a very good incentive to fill in that form, and the council apartments are utilized better.

    Sod that, C is willing too pay a high rate in the first place and knows that what they doing is illegal. Get them to fill out the form against the pain of going to prison, an amnesty should do it, and then allow them a small discount on the £1,000 as a reward.

    Of course this wouldn’t be a problem if housing wasn’t subsidised in the first place. Sell it all and then provide welfare to those who need it when they need it and not for the rest of their natural.

  15. What Matt W said. But blokeinfrance has a point that it is probably most common in London, for the simple reason that higher rents make it most profitable there.

  16. bloke in spain, from what I’ve heard of it (from some of the sub-tenants), it’s usually rented out to strangers for hard cash, not relatives one’s doing a good turn for.

    And these days it’s usually rented out to economic migrants, mostly central Europeans.

  17. Then on top of the crooks and fraudsters, let’s figure out how many folk have spent years occupying council houses that they should not have because their incomes are way above what would pass muster for consideration for a new applicant.

    Then lets have the numbers for widowed singletons who are still occupying a three or four bedroomed house that they haven’t needed for years.

    Then let’s reinstate all the boarded up council houses that are only empty because they are in a blighted zone caused by a small minority of tenants from hell.

    And how much of social housing shortage would we have then? My guess is we wouldn’t have a shortage at all.

  18. Surely it’s simple: if you have sublet your council home you are obviously no longer in need of it. You, and your tenant then go to th eback of the queue. All income received is then subject to a tax clawback but to provide the right incentives you assume the illegal tenant has to pay it at the official rate ie the £400 unless he can prove he has paid more, in which case the council tenant is liable on the £1000. That way the risk of getting caught makes it not worth doing from either side.

  19. Re Richard @ 20
    But it’s not going to be something that you will hear of, is it? I can think of half a dozen people I know who are at one end or another of such an arrangement but that’s only because I’ve known them for years. If the investigation has been conducted as they say, it will have identified all of those.
    That people do it, is hardly surprising. A council property can be worth £100p/w+ in savings over private rental. When you have an asset like this, there’s a great reluctance to surrender it. I wouldn’t be at all surprised if half of the figures quoted are informal sub-lets to family etc.

    Although sub-letting for market rent obviously goes on, doing so is fraught with difficulty. There’s no legal recourse to getting the rent paid so the letter has to be able to exert pressure on the tenant by other means. Simple threats of eviction can backfire. If the tenant has sussed that they’re living in an illegal sub-let they’ve always got the ‘nuclear’ option of threatening to inform the authorities themselves, if they’re evicted. Let your council flat to the wrong person & you could easily find yourself with them living there rent free whilst you pick up the bill, the alternative being legal problems & loss of the property.

    Entirely predictably, when you’ve assets valued in the billions the whole of public sector housing is riddled with graft. The last time I was involved in getting a flat tenancy ‘steered’ in the desired direction it cost a year’s rent payable cash to an allocations manager. Apart from that, a piece of cake. Simply a matter of knowing the right people.
    Evidence? Not easy to gather because everyone involved has an interest in keeping it quiet. You do have to wonder though. There’s blocks of council flats, now almost exclusively occupied by one ethnic group, that had a representative mixture of tenants not so many years ago. That’s theoretically impossible. If the council were filling voids on the basis of need & time on the waiting list the occupancy should be more diverse. OK, NOW families might refuse offers of housing in what’s become a ghetto but you need a critical mass of one ethnic group to start the process. Where’d that come from? Political interference?
    This is from the horse’s mouth in the shape of a major housing association area manager. To quote: Responding to Greater London Authority strategic housing policy for the London core they’re disposing of smaller multiple occupancy properties, the ones that provide a couple of flats – a 1 bed/3 bed or 2 bed/3 bed combination – in favour of units suitable for larger families. Small families, who tend to be predominately white, are encouraged to go for ‘rent to buy’ in the outer suburbs or beyond the GLA area altogether. Encouraged? The encouragement I’ve seen consists of allowing buildings to deteriorate due to lack of maintenance until they can get it signed off as “uneconomical to repair”. The tenant is then issued with a notice of rehousing. The legal advice I got said this is illegal. The tenancy agreements require the HA to keep the property in good repair & they can only require the tenant to temporarily surrender their home for renovation, not give it up altogether. HA’s must know this but aren’t informing their tenants. Result of my chat with the HA manager was cutting a deal for the tenant that got them a place they wouldn’t ordinarily have qualified for. Better area. Bigger flat. Discussion was like playing poker. She knew we had them over a barrel so it was a case of seeing how far we could push them. The upstairs tenant had already vacated & the renovation work needed to make the entire property liveable again would have cost a packet.

    Whole bloody thing stinks to high heaven.

Leave a Reply

Your email address will not be published. Required fields are marked *