Housing Fraud Daniel Skinner, Partner, Capsticks LLP Helen Gascoigne, Associate, Capsticks LLP [email protected][email protected] 07841 004921 01962 678398/07540 200 033 @DSkinnerLegal @misshelsg What we will cover
What is it? Criminal and civil action Subletting Ground 17 false statement Succession Only or Principal home
Investigation and evidence gathering Case Law Housing Fraud What Is It? What is it?
Subletting Not using as main and principal home Illegal occupation Obtaining property by deception Assignment/succession fraud Abandonment Fraudulent Right to Buy Why Does It Matter?
Tenancy fraud costs! Costs to landlord of temporary housing are high Loss of housing stock Waiting lists for social housing are long and demand far exceeds supply Property can be allocated to person(s) genuinely in need There should not be abuse of social housing
Tenants should not obtain social housing if they do not have the need for it nor profit from it The Figures Audit Commission Report 2014 loss to housing associations of housing fraud was 919 million The most common fraud: 1) Abandonment
34% 2) Subletting 32% 3) Succession/Assignment 19% Criminal & Civil Action Prevention of Social Housing Fraud Act 2013
Specifically housing sector focused - on subletting, parting with possession and recovery of related profit Creates criminal and civil offences Can seek both Criminal Offence
Prosecuted by Local Authorities 2 offences: 1)one lesser (knowingly) 2)one more serious (dishonestly) Proceedings to start within 6 months of knowledge
No prosecution after 3 years from offence Criminal Offence Penalty: Lesser offence: Fine not exceeding level 5 (5,000 if committed before 12 March 2015, unlimited if committed after) More serious offence: Magistrates Court maximum of 6 months imprisonment and/or fine Crown Court up to 2 years imprisonment and/or fine
Civil Remedies Possession proceedings Prevention of Social Housing Fraud Act 2013 introduces section 15A Housing Act 1988: If the tenant sublets, the assured status is lost and cannot be regained Unlawful Profit Orders To recover profits made Subletting
Subletting what is it? The T: In breach of term of the tenancy Sublets the whole of the property has ceased to occupy the property as their only or principal home has received money as a result Doesnt count if: Part of premises Caretaker Shared ownership
Notices Serve NTQ AND Serve NOSP Without Prejudice to each other 1) Ground 12/1 2) Any other applicable grounds e.g. rent, asb or false statement Dont forget 85ZA HA 1985/Pre Action Protocol review of the landlord's decision Unlawful Profit Orders
Will be made if they consider it appropriate Amount set is to represent profit Maximum = amount received by the tenant for the subletting less the rent paid to Landlord Subject to the rule in Poplar HARCA v. Begum & Rohim
If criminal UPO made, can get civil UPO too (some restrictions) If over 5,000 can seek interest Calculating the Step 1 Determine the total amount the Tenant received as a result of the subletting (or the best estimate of that amount). Step 2 Deduct from the amount determined under step 1 the total amount, if any, paid by the Tenant as rent to the landlord (including service charges) over the
period during which the offence was committed. False Statement (Ground 17/Ground 5) False Statement Ground 17/Ground 5 (discretionary ground) False statement made knowingly or recklessly
before tenancy was granted Can probably rely on omissions as well as false statements Landlord must have relied upon the false statement or omission Criminal Offence?
Housing Act 1996 s.171 False statements and withholding information s.214 False statements, withholding information and failure to disclose change of circumstances Fraud Act 2006 s.1 Fraud s.2 Fraud by false representations s.3 Fraud by failing to disclose information s.4 Fraud by abuse of position Succession Successions
Incentive to succeed even if not entitled: Avoids homeless Payer lower rent than private sector Better management/repairs than private sector Potential RTB Need evidence to entitlement
Succession Death does not end the tenancy Tenancy passes to Personal Representatives as part of the estate Is there a right to succeed?
If no succession, what do you if the property is still being occupied? Succession Act quickly! Check if there is a succession check the tenancy agreement
If potential discretionary succession, request evidence of entitlement and give timescales Serve NTQ as soon as possible and set up use & occupation account Ending the tenancy
Address NTQ to Personal Representatives Serve at the property Send copy to Public Trustee with Form NL1 and fee (assuming no Grant of Probate)
Should get an acknowledgement from them Possession Issue possession proceedings Based on NTQ already served
Set out why they are not entitled to succeed Claim use & occupation charges Only or Principal Home What Does The Law Say.? Under s1 HA 1988 (assured) and s81 HA 1985 (secure) a tenant must use the property as their only or principal home.
T or at least one Joint T must live at the property as their only or principal home or Ts spouse or Civil Partner lives at property (Family Law Act 1996) Only or principal home If not, then they lose their assured status But the tenancy still exists L must therefore take steps to end the contractual tenancy by serving a notice and obtaining (and enforcing) an Order for Possession Meaning of Only or Principal
Home It is a question of fact - which should be considered objectively Some factors to be considered? Where is T sleeping on a daily basis? Where are Ts clothes and possessions being kept? Is T using the property as his home address e.g. for the purposes of his bank accounts, DWP, GP, employer etc.? Does T have any intention to return to the property?
Only or Principal Home Tenancy doesnt end until the expiry date of the NTQ If T or JT moves back in before expiry of NTQ then regains security
Remember to serve NTQ in accordance with the tenancy agreement - most likely to be at the property Right to Buy Fraud
Right only applies if tenant is living at the property as their only or principal home Do checks Ask how being funded. Query - can you force them to tell you? Increase of 52% in fraud cases between 2009 and 2012 Check for Possession orders Difficult to set aside afterwards Investigation & Evidence Gathering Spotting Fraud
No response to letters or calls No repairs requested Neighbours observations Signs of non-occupation e.g. build up of post Lots of visitors or unusual activity or ASB T not at property (no access or another person there instead) for visits, appointments for repairs or
gas servicing Gathering Evidence Neighbours Contractors Police
Carry out unannounced home visits at various times of the day Check contact records on tenancy file remember to check with other departments Gathering Evidence
Check Electoral Roll Check with HB or DWP Check FaceBook etc Joint working Anti Fraud Network External counter fraud organisation Visits
Check documentation against sign up docs Locks on internal doors? Family photographs do they fit T?
Do the contents furniture/personal belongings fit T? Obtaining Information Data Protection Act 1998 Allows for disclosure of information e.g. one off requests in connection with legal proceedings or for the prevention or detection of a crime Data sharing Protocols with Local Authority CPR Direct Request to Defendant under Part 18 if in proceedings
Preventing Fraud Regular audits Colour photographs of T at sign up Easy reporting Information sharing
Tenancy Fraud Forum Amnesty? Case Law Poplar HARCA v Begum & Rohim (2017) The first case to consider and give guidance on calculating Unlawful Profit Orders The property - a 2 bedroom flat was being sublet to a couple being charged 400pcm The Defendants were receiving full Housing Benefit to cover the weekly rent (587pcm)
Possession proceedings were issued on the basis that the Defendants had sublet and therefore had lost security of tenure (under section 15A of the Housing Act 1988). In the alternative, possession was sought on Grounds 10, 12 and 14. An outright possession order was requested together with an Unlawful Profit Order Poplar HARCA v Begum & Rohim (2017) At trial, the Judge found that the Defendants had not sublet and had not parted with possession of the whole flat
The judge accepted the alternative claim but granted a suspended possession order because: the Defendants had not made a profit had moved out for unselfish reasons and had been living in cramped conditions The Judge refused to make an unlawful Profit Order on the basis that the Defendants had not made enough from subletting to cover the rent for the flat
Poplar HARCA v Begum & Rohim (2017) The Appeal Judge overturned the Trial Judges decision and made an Unlawful Profit Order as the money made from the subletting was pure profit He went on to confirm that Housing Benefit should be taken into account in the UPO calculation as to disregard Housing
Benefit under Step 1 but include it to the ill-gotten advantage of the fraudster under Step 2 would be to thwart the obvious intention of Parliament to provide a mechanism with which to strip him of his spoils North Hertfordshire DC v. Carthy (2003) False Statement by Omission Carthy had applied as homeless had represented (accurately) that their family were living in overcrowded accommodation When property was subsequently allocated to them they failed to inform the LA that their home in the
Philippines was habitable again Court allowed appeal against initial decision that omission had not induced grant of tenancy North Hertfordshire DC v. Carthy Council application forms usually require applicant
to notify of any changes Judge suggested that would be the case even without such a requirement but check your application forms Court noted that s214 HA 1996 makes it a criminal offence to fail to notify LA of changes What about direct applications to RPs? Is silence enough for Ground 5 or Ground 17? Brent LBC v. Cronin (1998) Subletting Only intending to be away for a short time or uncertain time is still subletting
D had epilepsy and went to stay with sister-in-law and let the property to a couple for 40pw Court said Ts plans were uncertain and he had only intended to be away for a short time On appeal said subjective intention to return not relevant Only or principal home
Its a question of fact Ujima HA v. Ansah (1998); Peabody v. Grant (1982) Day count isn't sufficient or determinative Dove v. Havering (2017) Can still have an intention to return if permanently in a nursing home Hammersmith & Fulham v. Clarke (2001)
Lambeth LBC v Vandra (2005) The absence of direct evidence is not fatal An alternative explanation does not necessarily mean the case is not proved
Inferences can be drawn on balance of probability The content of this presentation is for general information purposes only. It does not constitute professional advice (legal or otherwise) nor should it be used as such for any specific situation. The information should be read in the context of the entire presentation. We therefore cannot accept responsibility for any act and/or omission based on the material contained in it Capsticks LLP 2018
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