Baroness Eaton
Main Page: Baroness Eaton (Conservative - Life peer)Prevention of Social Housing Fraud Bill
Baroness Eaton Excerpts
Baroness Eaton
My Lords, there are around 4 million social homes in England and more than 200,000 in Wales. These homes provide safety and security, allowing roots to be put down and families to flourish. Social tenants enjoy a comparatively high level of statutory protection and, of course, benefit from submarket rents. In some parts of the country, social rent is less than 50% of the market rent. In addition, many social homes can ultimately be purchased by the tenant at a substantial discount under the right-to-buy scheme. It is therefore unsurprising that there is such a high level of demand for these homes: almost 2 million households are on the waiting list, many of whom are living in accommodation that is completely unsuited to their needs.
At the same time, some people are cheating the system. Whether it is by subletting a home they have been allocated or by lying about their circumstances to be allocated one in the first place, they are depriving of a settled home those in genuine need who play by the rules. Earlier this month, the Audit Commission revised upwards its estimate of the number of social homes in England that are being unlawfully occupied. That figure now stands at 98,000. I should of course remind the House that the vast majority of social tenants play by the rules and are no doubt as appalled as everyone else by this abuse.
The Prevention of Social Housing Fraud Bill has a very simple aim: to reduce the amount of social housing that is being misused, thereby ensuring that more of it is available to those in genuine need and who play by the rules. It seeks to do this by increasing the deterrent to those considering cheating the system and by strengthening the ability of landlords to detect and punish those who do. I congratulate Richard Harrington MP both on introducing this important Bill in the other place and on ensuring its rapid progress there, which I know was helped greatly by the generous support given by the Opposition.
Over the past few years, social landlords have been encouraged, both by this Government and the previous one, to crack down on the abuse of their stock. It is pleasing that an ever-increasing number are doing just this. However, while it is perfectly reasonable to expect social landlords to tackle this abuse, it is essential that there is legislation in place that will both help and encourage them to do so. That is where the Bill comes in.
This is not the time to go through each clause of the Bill in detail, but I will very briefly highlight its main provisions. Many forms of social housing fraud are already criminal offences: fraudulent right-to-buy applications and lying on the form when applying for a social home are caught by existing criminal legislation. However, there is a gap when it comes to what is often perceived to be the most prevalent form of social housing fraud: subletting. It is very important that this gap is filled.
A subletter can earn very substantial amounts of money, often by continuing to pay social rent to their local authority or housing association landlord while charging the subtenant the market rent. In areas where there is a big difference between social and market rents, it is not unusual for a tenant to make many thousands of pounds a year, all of it hidden from the tax man. As the Second Reading debate in the other place made clear, subletting is a problem even in low-rent areas.
In the vast majority of cases currently detected, the subletting tenant simply has to hand back the keys, resulting in the loss of a home that they were not living in anyway. They walk away, often with a very tidy profit and nothing to deter them from trying their luck somewhere else. The Bill deals with this by creating new criminal offences of subletting without permission, as well as enabling a court to award to the landlord any profit the tenant has made from the subletting, regardless of whether the landlord has incurred a loss.
The other area is access to data. Landlords often cite their lack of access to data as a significant obstacle that prevents them recovering as many homes as they otherwise could and they compare the powers available to them with those available to their housing benefit counterparts, who can compel a long list of organisations to provide them with data in connection with their investigations. By contrast, social housing fraud investigators cannot compel anyone to supply them with data. As a result, they are able to detect and prosecute far fewer cases than they otherwise could. Both forms of fraud come at a considerable cost to the taxpayer and it is not right that there is such a difference in the powers available to detect them.
The Bill would rectify this imbalance by allowing the making of regulations that would give social housing fraud investigators similar powers to those currently enjoyed by housing benefit investigators. These regulations will be subject to affirmative resolution. Importantly, this Bill will not affect tenants' current rights to take in lodgers or to sublet part of the property, provided that the tenant lives there too. In some cases this is a statutory right, in others it is a common feature of the tenancy agreement. I should add that the Bill would not criminalise those tenants who sublet not knowing it to be against the rules and would not criminalise those who unwittingly rent a social home from the tenant.
Discussions with landlords have shown that often subtenants do not know that the home in which they are living is in fact a social home. If, as can happen, they have seen the property advertised by an estate agent, have put down a deposit and pay market rent then it is fair that they would assume they are renting from a private owner. The first time many realise that the home they are renting is in fact a social home is when the local authority or housing association landlord knocks on their door. As I hope I have made clear, this is not an attack on social tenants, most of whom I am sure would welcome this Bill. What it seeks is to bring about a fairer system, rectifying the anomalous situation where the incentive to cheat is so much greater than both the risk of detection and the eventual penalty incurred.
This is a Private Member's Bill, but it does contain some significant provisions that will be welcomed by the housing sector and, no doubt, by the taxpayer. I hope the wide support it has received up to this point will continue in this House. I do not claim this Bill to be the single answer to all the issues affecting social housing in this country, but it will undoubtedly ensure that more of it is used by those in genuine need.
Baroness Eaton
My Lords, I thank most sincerely the noble Lords, Lord Greaves and Lord McKenzie of Luton, and my noble friend Lady Hanham, who have so kindly contributed to the debate on the Bill. I am delighted that there is support for the proposal that this Bill should reach the statute book speedily. I was very interested in the comments of the noble Lord, Lord Greaves, about the changing scene in landlords and social housing. Having cut my teeth as a new councillor in the field of housing, I realise what a different arena it is some 28 years on. We now have large landlords who often stretch across a number of authorities and into the regions. It is very different from the days when someone could walk around the streets and know precisely who lived in each house.
The noble Lord asked about prosecuting tenants who may have sublet their property. My understanding is that whether subletting is allowed or not is normally made very clear in the tenancy agreement. In the Bill we recognise that it is the landlord who will decide whether to prosecute. It is expected that criminal sanctions will be used only in the most serious cases of deliberate attempts to defraud. If the activity of subletting has been allowed, it is understood that that would be taken into account in any course of action that the landlord may wish to take.
The question on tax from the noble Lord, Lord McKenzie, was most interesting. Because of the expectations of self-certification, I will need to take further advice and write to the noble Lord on that point. However, it is a valid question given that one of the main thrusts of the Bill is to save the public purse from fraudulent behaviour. I will make sure that these points are addressed. I am also pleased to note that the Government are working closely with the housing sector, and indeed my noble friend Lady Hanham mentioned the Chartered Institute of Housing. The Local Government Association is working to ensure that, as far as possible, tenants will be aware of the new arrangements and there is an expectation that landlords will make the implications of any new legislation clear to tenants.
Again, I thank all noble Lords for their contributions.