The Prevention of Social Housing Fraud Act (“the Act”) came into force on 15 October 2013. The Act has made tenancy fraud a criminal offence and given local authorities the power to prosecute those who unlawfully sublet their social housing where a tenant:
- sublets or parts with possession of a property or ceases to occupy knowing that it is a breach of tenancy; or
- sublets without consent and ceases to occupy the property as their only or principal home.
NB: The first offence only requires knowledge that the tenant sublet their home in breach of their tenancy agreement, the second requires proof this was done dishonestly.
The maximum penalty for the first offence is a fine of £5,000. The second, more serious, offence is punishable by a two-year jail sentence and/or a fine of up to £50,000. The court will also have the power to make "unlawful profit orders" that require the tenant to pay back any profits "the court considers appropriate".
There are various defences a tenant can use. For example if a tenant is not occupying the property due to actual or threatened violence towards them, or a family member residing with them for the same reason; if the landlord has consented to the subletting; or, where the remaining occupier (not the tenant) can apply to court for a transfer of the tenancy (e.g. under family law).
The Housing Act (1988) has also been amended so that where an assured tenant parts with possession or sublets the property they lose status as lifetime assured tenants for good.
It is unclear if cash-strapped councils will, in practice, prosecute on behalf of housing associations. Will they require housing associations to seek possession before taking criminal proceedings, (so they can rely on the finding of the civil court)?