Social housing tenants who sub-let their properties should be prosecuted for fraud according to a new report published today (Tue). Under current rules, sub-letting social housing is a civil offence but the New Local Government Network (NLGN) is calling for it to be treated the same as benefit fraud in the eyes of the law. The think-tank’s report claims that at least 50,000 people are fraudulently living in social housing costing councils thousands of pounds and depriving those in real need of housing.

Unlawful subletting refers to situations in which a tenant in social housing violates the conditions of their tenancy by renting their property out to individuals not permitted to live there by the conditions of tenancy. It is estimated that 80% of people living in fraudulently rented social housing would not themselves qualify for council help.

In November 2009 the Government announced a ‘National Crackdown’ on fraudulent sub-letting, offering £500 rewards to members of the public who provide information that helps to catch cheating landlords. However the NLGN argues that the problem won’t be sufficiently tackled unless it is treated as seriously as other kinds of fraud, such as benefit fraud. It is calling for an addition to be made to the Housing Act so that the 2006 Fraud Act can be used to prosecute individuals subletting social housing. The call has been backed by the Chartered Institute of Housing.

According to estimates from the Audit Commission, each unlawfully sub-let property costs local councils an average of £75,000 over three years. It also restricts the ability of local authorities to accommodate the 1.76million households on the social housing waiting list. According to the NLGN research, there is strong support from housing professionals to make the offence illegal with 92% of those surveyed agreeing that the measure would help to tackle unlawful sub-letting.

Report author Tom Symons said: “The costs associated with unlawful subletting demand action that goes beyond a quick one-off crackdown and instead seeks to effect legal change as well as a major shift in societal attitudes towards tenancy fraud.

It is imperative that central government now makes the changes that will enable local authorities to galvanise their anti-tenancy fraud efforts and minimise the high social and financial costs of unlawful subletting.”

Joanne Kent-Smith, Senior Policy and Practice Officer, Chartered Institute of Housing said “At a time when demand for existing social housing significantly outstrips supply, tackling unauthorised subletting and occupancy is an important challenge for social landlords, and one which can be both complex and resource intensive. The government has recently provided funding to support the sector increase activity in this area and improve working practices. The CIH welcomes this report which reviews the surrounding policy and legislative framework, and argues for changes that would assist social landlords overcome obstacles.”

Unlawful Sub-letting – in numbers

Average cost per year of housing a family in temporary accommodation - £11,000
No. of families in temporary accommodation – 64,000
Estimated % of social housing in London that is unlawfully sub-let – between 2.5% - 5%
Estimated number of unlawfully sub-let properties nationally – 50,000
No. of families on the social housing waiting list – 1.76 million
Estimated cost of a sublet property over 3 years - £75,000
Income per year of a sub-let property in London - £12-20,000
Estimated minimum cost of recovering an unlawfully sub-let property - £4,000
Cost of building a new socially rented house - £67,000-100,000+
Estimated asset value of all unlawfully sub-let properties - £2bn