What Is Tenancy Fraud?

mariam-abu-hussein
Mariam Abu HusseinLegal Assessment Specialist @ Lawhive
Updated on 16th January 2024

An increase in homelessness and the scarcity of social housing in the UK underscores the importance of using existing housing effectively. However, social housing fraud, also known as tenancy fraud, is a growing concern that often goes unnoticed partly due to a lack of data collection on tenancy fraud since the abolition of the Audit Commission in 2015.

tenancy-fraud

If a person is caught committing council housing fraud, they can be fined or (in serious cases) even sent to prison.

What is tenancy fraud?

Tenancy fraud happens when someone wrongfully stays in a social housing property. This includes:

  • Renting out a property without the landlord's knowledge or permission (known as subletting);

  • Obtaining housing through deception by providing false information on a housing application;

  • Trying to take over a tenancy after a resident's death when not entitled to;

  • Getting paid to pass on keys;

  • Letting someone else live in a property without the landlord's permission and ceasing to use the property as a main residence;

  • Providing incorrect information in a Right to Buy or Right to Acquire application.

Subletting for profit is a crime under the Prevention of Social Housing Fraud Act 2013, and other tenancy fraud types can be prosecuted under the Fraud Act 2006.

Tenancy fraud is thought to be increasing for several reasons including:

  • Lack of affordable housing in the private sector;

  • Stagnant incomes;

  • Ease of short-term or holiday letting through online platforms like Airbnb;

  • Pressure on budgets, staffing, and skills of social housing providers.

Tenancy fraud examples

Providing incorrect information

When someone trying to rent a property gives false information, like fake names or inaccurate details about their finances, this is tenancy fraud and it often happens because the individual believes they won't be approved for the property otherwise.

Unauthorised subletting

If someone listed as the tenant rents out a property to another person, it's called subletting. In these situations, the subtenant pays rent to the listed tenant, who then pays it to the social landlord. Subletting for profit is a crime under the Prevention of Social Housing Fraud Act 2013.

Not using the property as a main or only home

This is when a tenant doesn't use a property as their main home, instead they sublet it or leave someone else in the property. Under the Housing Act 1998, an assured tenancy is valid if the tenant or at least one joint tenant lives in the property as their only or principal (i.e. main) home. If the named tenant doesn't meet this requirement, they may lose their right to an assured tenancy.

What are the signs of tenancy fraud?

Potential signs of tenancy fraud could include:

  • Seeing unfamiliar people coming and going from a property;

  • Noticing unusual activity, like people entering and leaving with suitcases or large bags;

  • Neighbours asking when rubbish is collected;

  • Observing someone collecting rent from neighbours.

Why is tenancy fraud a problem?

When people misuse social housing through tenancy fraud, it's not a harmless act. It directly affects the availability of homes for those who truly need them.

With thousands of social homes potentially facing this issue, waiting lists get longer than necessary, making it harder for vulnerable individuals and families to find suitable housing.

How can landlords prevent tenancy fraud?

To prevent tenancy fraud in social housing, landlords should:

  • Verify tenant identity and information during the application process through background checks and confirming provided details (i.e. checking a tenant's application against other records such as the Electoral Roll or asking for valid ID, like a passport);

  • Carry out surprise inspections to discourage fraud and confirm tenants do live in a property;

  • Create a system for neighbours and social housing staff to report suspicions of tenancy fraud.

If a social housing landlord suspects a tenant of fraud, they should seek help from a solicitor for guidance on how to recover the property and any other legal action they may be able to take.

What are the potential consequences of tenancy fraud?

Tenancy fraud is a serious issue. If someone is caught doing it, they could be evicted, fined, or even sent to jail.

The law allows the property to be taken back under certain Acts, considering lying to get social housing as a criminal offense. The Prevention of Social Housing Fraud Act 2013 also makes it easier to punish those involved in subletting fraud, with potential jail time.

Landlords can also use civil penalties, like getting an order to take back the property and getting back any money the tenant made from subletting.

Seeking possession

A landlord can use Ground 17 of the Housing Act 1988 to seek possession, giving the tenant two weeks' notice, if the tenant made false statements knowingly or recklessly.

However, seeking possession in this way only works against the original tenant, not successors or assignees.

In tenancy fraud cases, the court considers the seriousness of deception from tenants when deciding whether to grant a possession order.

Rent repayment orders

If a local authority suspects tenancy fraud, they can use a Rent Repayment Order (RRO) to reclaim up to 12 months' worth of rent or housing benefit payments to hit fraudsters where it hurts - their pocket.

Unlawful profit orders

If a tenant is found guilty of tenancy fraud, the court can issue an unlawful profit order, which requires them to repay any profits from subletting back to the landlord. This order can be pursued in both criminal cases and as part of civil court proceedings.

In most cases of tenancy fraud, however, housing providers usually aim to reclaim the property without going to court, and many sub-letters leave voluntarily when discovered. However, some councils may pursue civil action for damages.

For more information on tenancy fraud, including how to prevent it, detect it, and what legal action may be taken against tenants who commit tenancy fraud, speak to our legal assessment team for a free case assessment to see how our expert solicitors may be able to help.

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