Author: Andrew Lane

“I would stress that it is not compassionate to allow profiteering fraudsters indefinitely to continue to occupy premises and thereby exclude from such accommodation more needy and deserving families.”

This year’s International Fraud Awareness Week starts tomorrow (17 November) and runs through to the 23rd. Two suggested ways of getting involved are posting on social media with the tag #fraudweek and highlighting the work your organisation is doing and has done to tackle fraud.

An excellent example has been provided by Buckinghamshire Council.

in the meantime, can you identify the citation from a judgment at the head of this article?

Many of you will have read a recent news release from the London Borough of Barnet in which it was reported that they had secured estimated savings of £1.3 million by recovering 41 properties “being used illegally”, and retained an asset value of £1,534,800 by identifying 12 fraudulent right to buy applications.

Earlier this year, the London Borough of Enfield reported that it had saved over £300,000 in each of the previous two financial years by recovering (20) properties found to have been unlawfully sub-let by the tenant.

These of course are headline figures with little to no appreciation of the human cost of abuse of the social housing sector, the hard work of a variety of individuals to uncover and demonstrate the unlawful activity, or the stories given by the tenant either to cover-up the reality and/or explain away seemingly compelling evidence raised against them.

Local authorities can in particular therefore see real savings given the likely impact on and relationship with temporary accommodation costs. A pro-active anti-fraud strategy is essential in any event, even though from a court perspective the litigation process can be drawn out and expensive, even if ultimately successful. To give 2 examples from cases I have acted in in the last couple of years:

Case 1 – allocation fraud

A local authority nominated the tenant to a housing association in 2007, the tenancy commencing the same year. Before the actual grant of tenancy, she was required to complete a housing application form, one of the questions on which was “Do you own any other home or property?”.  To this she answered “No” but she did in fact own a house. The court heard from internal and local authority fraud investigators, and determined that grounds 12 (living at property as only or principal home, and notify landlord of lengthy absences) and 17 were made out. The trial judge concluded “the counterveiling weight of public policy considerations lead me to conclude with no doubt that there should be an outright possession order”.

Landlord Costs: £27, 105.34. Notice to Judgment: 2 years 1 month.

Case 2 – subletting of housing association property

The tenancy commenced in 1999. Fraud investigation showed connections in Wales, and in another city in England for extended periods. The tenant claimed her brother was the instigator of what she said were false complaints of her subletting, which included copies of rent book payments. During the trial she claimed to have merely been visiting friends elsewhere (despite being registered for council tax at those addresses), to have forgotten her first husband’s name when asked about persons recorded in a credit reference report, and to have no real answer to companies’ links showing both her involvement as an officer and address elsewhere. A possession order was made on an outright basis along with a £136,080 unlawful profit order.

Landlord Costs: £17,309. Notice to Judgment: 2 1/2 years.

Of course in some cases the tenant concedes early on in the process, without the court process being instituted or having to come to any contested conclusion.

What is apparent is that effective systems in place can greatly enhance prospects of success, ultimately reduce costs and preserve the integrity of the landlord’s allocation and housing management system:

• Clear application forms.
• Systems accessed by and reviewable across internal departments.
• Appropriate data sharing agreements.
• Proper application of the pre-action practice direction & protocol process.
• Use of credit reference checks and intelligence services such as NAFN.
• Effective and consistent record-keeping.

I am starting the process of writing the 3rd Edition of Cornerstone on Social Housing Fraud, and this will continue the approach of setting out the legal process and jurisprudence in the housing fraud arena alongside the investigative options available with full acknowledgment of any statutory or other restrictions.

Finally, to highlight 3 excellent fraud conferences coming up:

(1) 17 October, 2024

Housing Sector Fraud Risk Conference in Birmingham

(2) 14 November, 2024

Oxford Investigation Services, Annual Fraud Conference 2024 in Oxford

(3) 13 March, 2025 (details to be announced)

Tenancy Fraud Forum Annual Conference 2025 in London

On 15 May 2024 one of my favourite conferences is taking place at the Kensington Conference and Events Centre – organised by the Tenancy Fraud Forum.

It is always superbly organised, tremendous fun and full of wonderful speakers, organisers and participants. I am privileged to be speaking again this year – this time on the subject of ‘Getting evidence from organisations’.

The agenda for the conference is very full and varied:

There is still time to book so press the link now!

I have written on this blog previously about Airbnb-type accommodation and the potential impact of its use on tenancy and long lease agreements. To recap and summarise by way of:

1. A lessee had breached a covenant in her lease not to use her flat other than as a private residence by granting a series of short-term lettings of the property. The fact that the lessee had granted the lettings meant that her occupation of the flat was so transient and not sufficiently permanent that she would not consider the property her private residence: Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC); [2017] 1 P. & C.R. 4.
2. The lessees of a flat let on a long residential lease had breached a covenant restricting the use of the flat to use as a private dwelling when they made it available for short-term occupation via the “Airbnb” and “Booking.com” websites. However, such activity did not breach a covenant prohibiting the carrying on of a trade or business “upon the property”; there was a distinction between using premises as a business resource and carrying on a business “upon” the premises: Triplerose Ltd v Beattie [2020] UKUT 180 (LC); [2020] H.L.R. 37.
3. HHJ Luba KC dismissed an appeal against the granting of an injunction which prevented use of demised premises for short-term lets: Bermondsey Exchange Freeholders Ltd v Ninos Koumetto (2018):

“40. I remind myself that Clause 2.10(2) provides that the Tenant covenants: 

“Not to part with or share possession of the whole of the Demised Premises or permit any company or person to occupy the same save by way of an assignment or underlease of the whole of the Demised Premises”. 

41. Where the Tenant parts with possession of the whole to another, that would usually provide the other with exclusive possession and amount to a letting. Where the Tenant allows another to ‘share’ possession that would usually be a reference to a licence to occupy. 

42. I accept Mr Sefton’s submission that, on a proper construction, this sub-Clause prohibits both parting with or sharing possession of the premises, on the one hand, and, on the other hand, permitting someone to occupy the premises.”

“60. I turn then to the User covenant (Clause 2.4) which, it will be recalled, provides that the Tenant is: 

“Not to use or permit the use of the Demised Premises or any part thereof otherwise than as a residential flat with the occupation of one family only…” 

66. For my part, I am in entire agreement with the Judge. The user covenant is clear. Clause 2.4 is breached when the flat is not being used as a residential flat but as short-term temporary accommodation for transient visitors paying for such use by way of commercial hire. Just such a breach was found by the Judge in the instant case and I can detect no error in that finding.”

2023 has seen 2 cases addressing these issues. In Charles Hunt (Holdings) Ltd v 77-82 Bridle Close Freehold Ltd [2023] UKUT 32 (LC); [2023] R.V.R. 137, a collective enfranchisement case, the Upper Tribunal confirmed that all 6 leases in the property prohibited sub-letting:

“25. We regard that finding as contrary to the plain words of the covenant. It requires the tenant to occupy. It cannot be equated with covenants seen elsewhere which require the tenant, for example, not to use or permit the flat to be used “for any purpose other than as a private dwellinghouse for occupation by one family at any one time”. That was the covenant in issue in Triplerose Limited v Beattie [2020] UKUT 180 (LC), to which the FTT referred, where the Tribunal found that short-term Airbnb-type lettings were in breach of covenant. But this covenant goes much further and is quite different in its wording and effect.

26. We note that previous FTT and county court decisions about this covenant have found that it prohibits sub-letting; none of those decisions is binding on the Tribunal but we observe that those decisions were correct.”

More recently, on 28 November 2023, the First-tier Tribunal (Property Chamber), in City of Westminster v Ben-Soussan LON/00BK/LBC/2023/0051 the Tribunal found that the tenant had breached their lease, by short-term letting (Airbnb) between 12-17 July 2023, where it provided:

“Not to use or permit the Premises to be used other than as a single private residence for occupation by an individual or an individual and his family as his or their only or principal home”.

Paragraph 21 of the judgment concluded:

“The Tribunal finds, on a balance of probabilities, that the short-term occupation by paying strangers between the period of 12 July and 17 July 2023 means that the Property was being used in breach of clause 18(a). The advertising of the Property on websites means that the property was available to all. It was occupied by a paying guest for the relevant period (namely 12 July to 17 July 2023), and therefore it was not used as a single private residence by an individual or his family as their only or principal home given that it was being used for short-term occupation by a paying stranger.”

We are a week away from the International Fraud Awareness Week – which starts on 12 November 2023 – and the excellent Tenancy Fraud Forum has produced a flyer for all social landlords to use in order “to highlight the enormous negative effect that tenancy fraud has on the social housing sector”.

There is space at the top of the flyer where social landlords can add their logo and they can contact the Forum at admin@tenancyfraudforum.org.uk if they want help to do so.

The flyer can also be downloaded from the Forum’s website at https://lnkd.in/erbH7pNE.