Prevention of Social Housing Fraud Act 2013 comes into force

The Prevention of Social Housing Fraud Act 2013 has come into force today after a Government minister signed the necessary commencement order.

Key changes in the Act include:

  • Ensuring that assured tenants (who are not shared ownership lessees) will lose their security of tenure once and for all once they have sub-let or parted with possession of the whole of their property. This mirrors the case with secure tenants.
  • Allowing social landlords to seek a money judgment against tenants in respect of any unlawful profit made as a result of sub-letting their social housing tenancy. The Act introduces civil Unlawful Profit Orders that will apply to secure tenants and assured tenants of registered providers and registered social landlords where in breach of their tenancy agreement they sub-let or part with possession of the property and receive money in return.
  • Creating two new criminal offences. Courts must also consider whether to make a UPO following a defendant’s conviction for unlawful sub-letting or an associated offence.
  • Gives the Secretary of State and Welsh Ministers the power to make regulations to compel persons to provide information for the purposes of housing fraud investigations.

See also: What the Prevention of Social Housing Fraud Act 2013 means in practice by Byron Britton of Temple Court Chambers

An impact assessment published by the Department for Communities and Local Government today (15 October) said the “latest estimates” suggested there were around 98,000 unlawfully occupied social homes in England.

“This prevents social landlords from allocating them to those people in need,” it said. “There is currently a lack of adequate deterrent to tenants to abuse their tenancy, and social landlords have inadequate powers of investigation, often finding it hard to detect and prosecute social housing fraudsters.”

The impact assessment argued that Government intervention was needed to increase both the penalties for social housing fraud and social landlords’ investigatory powers.

The DCLG claimed the benefits would include:

  • A reduction in the housing benefit bill as tenants are rehoused in social properties;
  • Fewer civil cases being taken to court (as the result of the threat of a criminal sanction);
  • Local authorities and housing associations being allowed to better manage stock, house more households in genuine need and tackle issues such as overcrowding and underoccupation;
  • The detection of social housing fraud leading to the detection of housing benefit fraud.

The impact assessment claimed that the average annual benefits from introducing the legislation would be £18.7m and the average annual costs – such as void costs or lost rental income for social and private landlords – would be £2.6m.