This Act, which came into force on 15th October 2013 and currently applies in England and Wales only, makes it a criminal offence for tenants to sublet or part with possession of, their socially rented home.
The main objectives of the Act are to:
- deter tenants from committing social housing fraud
- incentivise those already committing social housing fraud to stop
- increase the powers of local authorities to investigate social housing fraud
- increase the number of recoveries of fraudulently used socially rented homes
The Act creates a new criminal offence of subletting, or parting with possession of, a socially rented home. There are two levels to the offence - ‘knowingly’ and ‘dishonestly’ which carry different sentences.
- ‘Knowingly’ committing social housing fraud- this is the lesser of the two offences. The perpetrator knows their actions were against the law and a breach of their tenancy agreement. The maximum penalty is a £5000 fine. There are some exceptions: the individual is exempt from the offence if they committed it under threats of violence or if they had the right to transfer the tenancy.
- ‘Dishonestly’ committing social housing fraud- this is the more serious offence. The perpetrator knows their actions were illegal and has done so dishonestly, for example if the tenant set out to defraud the housing provider to make a profit through subletting. The maximum penalty is an unlimited fine and up to two years imprisonment. There are no exemptions.
The Act gives the power to prosecute for these new offences to local authorities. Local authorities may prosecute on behalf of social housing providers, both in their area and from other local authority areas. There is no obligation for social housing providers, including local authorities, to bring criminal prosecutions in cases of social housing fraud, and providers may decide that recovering the property is the priority either through surrender or court-ordered possession.
The Act introduces a new procedure for the court to award payment to the social housing provider in the form of an ‘unlawful profit order’. The award can be made by either the civil or criminal court and would be valid along side any other sanctions, including a fine, imprisonment or eviction. The order can be made for any profit gained by the tenant from subletting the property, to be paid to the social housing provider.
Security of tenure
The Act makes an amendment to the Housing Act 1988 to bring parity between assured and secure tenants, in terms of security of tenure. If a tenant parts with possession of their property, or sublets the whole of the property, they will lose their ‘assured’ status and security of tenure. This cannot be regained by returning to the property. This measure will make it easier for social housing providers to recover the properties as the tenancy can be ended using a Notice to Quit.
The Act makes provisions for the Secretary of State to create further regulations around powers to access data when investigating social housing fraud.