Harassment and a £2bn fraud: unlawful subletting

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De Beauvoir Estate, where Jamie-Leigh Kidd unknowingly sublet a council property - a major problem in Hackney. Photo: fabbio on Flickr

Benefit claimants are making thousands of pounds from subletting their taxpayer-subsidised properties. Jessica Abrahams explores the problem of tenancy fraud in Hackney.

Last week, a man in Westminster became the first to be jailed for unlawfully subletting his council house – paving the way for Hackney to take a similarly tough approach and clamp down on what has become a major problem in the borough.

Council tenants, whose rent is subsidised by the government, can make huge profits by subletting their homes at market rates. In one case reported by a housing association a tenant had made almost £50,000 from subletting his flat. Even a Tower Hamlets councillor and a police officer have been implicated in the racket.

Earlier this year housing specialists HJK Investigations undertook the first large-scale investigation into council house fraud, revealing evidence of unlawful subletting in 20 percent of properties. This compares with the government’s official estimate of less than one percent.

Tenancy fraud is known to be a severe problem in Hackney.

Between 2008 and 2011, at least 232 taxpayer-subsidised properties in the borough were identified as being unlawfully sublet – a rate of more than one per week.

If HJK’s figures are to be believed, however, there could be around 8,500 further cases going undetected.

The problem is thought to be costing the taxpayer £2bn a year in temporary accommodation for families who would otherwise be able to live in these properties.

This is a particular issue in Hackney. With more than 15,000 people on the social housing waiting list, according to figures released in 2010, the London Coalition Against Poverty described the borough as being in the grip of a “housing crisis”.

Up until now, authorities have been unable to jail offenders because it is a civil rather than criminal offence. Last week’s case paves the way for tougher action.

But while the cost to the taxpayer is a well-documented problem, less reported is the impact on subtenants who unwittingly find themselves in unlawful accommodation with little legal protection.

A report published by the Department for Communities and Local Government in 2009 noted that: “Unauthorised subtenants may be unaware of their status and are vulnerable to being charged increased rents and deposits, unlawful eviction and homelessness.”

Yet in the three years that have passed since then, little has been done to protect those who find themselves in this position and they remain at risk of losing huge sums of money and suffering harassment when the fraud comes to light.

Jamie-Leigh Kidd had been renting a flat on the De Beauvoir Estate for several months when he found out he was living there unlawfully.

“We’d found the flat through an estate agent so we thought it was legitimate,” he says.

“But one day a guy suddenly appeared at the door demanding to be let in. He claimed he owned the flat and needed to come in.

“We convinced him to leave but he kept coming back every couple of weeks. I’m 6ft4 and so can stand my ground but even so it was intimidating.

“One time we answered the door and luckily had kept the chain on, because we could see another man hiding around the corner.”

Eventually the housing association discovered the flat was being unlawfully sublet to Jamie.

“We were told by the housing association to stay in the property to prevent the guy from getting in, but that meant we had the constant intimidation of him turning up at the door.

“When we were finally able to leave we received no deposit back. We lost £1800. It was a nightmare.”

Responding to Jamie’s case, a spokesperson for Hackney Homes told the Post:

“Hackney Homes carry out regular exercises to check for tenancy fraud.  Whilst we are aware that there is fair amount of unlawful subletting within the borough, accurate figures are hard to obtain.  We work closely with our residents, our partners in the local authority and specialist agencies to identify sublet properties rapidly, and take prompt and appropriate action to deal with any cases found…

“We will always advise sub tenants of their rights to seek independent legal advice and assistance from the housing options advice centre whilst we begin possession proceedings.”