How to...prevent right to buy fraud and right to acquire fraud Paul Hayes Head of Housing Litigation Lewis Silkin LLP 11 April 2014
The Regulatory Framework The Tenancy Standard states that: RPs shall publish clear and accessible policies which outline their approach to tenancy management, including interventions to sustain tenancies and prevent unnecessary evictions, and tackling tenancy fraud.
What is right to buy & right to acquire Right to buy Introduced under the Housing Act 1980. Confers upon secure and flexible tenants the right to acquire the freehold or a leasehold interest of their home at a discount. What are the qualifying conditions? The right to buy arises where the tenant at the time of the application is a secure or flexible tenant of the relevant local authority Cont d
What is right to buy & right to acquire The right is lost if the tenant no longer occupies the property as his only or principal home The right is lost on a tenant s death unless there is a succession. A secure tenant may ask for up to three family members to share the right to buy.
What is right to buy & right to acquire Preserved right to buy A secure tenant has become the tenant of a private registered provider the right to buy is preserved.
What is right to buy & right to acquire Right to acquire First introduced by the Housing Act 1996 Tenants have the right to acquire if: The Landlord is an PRP/RSL; The tenancy is secure/assured/assured shorthold tenancy The dwelling was publicly funded; The property has remained in the social rented sector; The tenant satisfies the qualifying conditions applicable under Housing Act 1985
What is right to buy & right to acquire Exceptions Tenants of certain dwellings are excluded from exercising the right. These include:- A tenant of a house, where the landlord does not own the freehold or cannot grant a lease of more than 21 years; A tenant of a flat, where the landlord does not own the freehold or cannot grant a lease of more than 50 years; A property within a building used for purposes other than housing; A property that was let to the tenant in connection with employment Cont d
Cont d Sheltered accommodation; Properties for disabled people; Tenants of housing trusts/charitable housing association; Properties that are to be demolished
What is right to buy & right to acquire The right cannot be exercised in the following circumstances: Order for possession Bankruptcy Suspended right to buy/acquire because of anti-social behaviour
What is right to buy & right to acquire Action by the Landlord Tenant secure, assured or assured shorthold? Joint tenancy? Application correctly completed? Tenant been a public sector tenant for the qualifying period? Tenant bankrupt? Possession Order? Cont d
What is right to buy & right to acquire Action by landlord cont d: Effective suspension of RTB order? Property excluded from scheme? Tenant previously received a discount?
Fraud? Tenant has misrepresented their circumstances to gain a discount they are not entitled to. Tenant has exercised the right to buy when they are not entitled to.
Fraud? Typical approaches: The Artificial Applicant - uses fakes identities The Hocus Historian - deliberately misrepresents the length of a tenancy The Scam Occupant attempts purchase whilst not occupying as only or principal home. The Flimflam Family - misrepresent their household composition. The Fake Funder - third parties provide finance.
Scale of the fraud 2012 White Paper Shutting the Door on Tenancy Fraud One Year On reported 0.4 percent of detected cases of tenancy fraud related to right to buy. The discount 75,000 and London 100,000 The Audit Commission report Protecting the Public Purse 2013, found that 102 cases of detected right to buy fraud, compared to just 38 cases detected in 2011/12 Protecting the Public Purse 2012, right to buy fraud new emerging fraud 38 cases with a value of 1.2million.
Tackling/preventing right to buy fraud Dedicated tenancy fraud Staff Tenancy Audits Strict identity checks
tackling/preventing right to buy fraud Identification documents: Driving licences and passports; EU Identity cards, residence permits issued by the Home Office or UK certificates of naturalisation; Bank statements and credit/debit cards; Birth, marriage, adoption certificates;
tackling/preventing right to buy fraud Residency checks: Data matching internal and external Original documents: Driving licence Bank/credit card, store cards and any other credit provider Mobile phone contract/bills Council tax bill, utility bill, television licence/satellite Children s birth certificates and school records
tackling/preventing right to buy fraud History and qualifying period Tenant occupied social housing for the last 5 years? Previous landlords Credit reference agencies Documents: Tenancy agreements, notices, possession orders Bank statements, utility bills, other correspondence Employment or benefit documents Family members 12 months residency Is the property subject to public funding?
tackling/preventing right to buy fraud Gathering information: Data Protection Act 1998 - data sharing must be fair and lawful Section 35 DPA - personal data exempt from non-disclosure provisions where disclosure necessary for the purpose of, or in connection with, legal proceedings, prospective legal proceedings and legal advice Section 29(3) for criminal offences Civil procedure rules 31.17 non-party disclosure
tackling/preventing right to buy fraud The prevention of Social Housing Fraud Act 2013 The Prevention of Social Housing Fraud (Power to Require Information) (England) Regulations 2014 No Powers for PRPs to require information The regulations allow local authorities to seek information from various organisations set out under Regulation 4(3) Penalties for those failing to provide information maximum fine 1000
tackling/preventing right to buy fraud Legal steps to combat right to buy fraud Possession Order does not have to be in existence at point of application Bristol City County v. Lovell [1998] Court to decide what it deals with first Application for RTB or Possession Basildon DC v. Wahlen [2006] Court will hear both claims at same time A person involved in RTB/RTA fraud may commit offences under the Theft Acts 1968 &1978, Criminal Attempts Act 1981, Forgery and Counterfeiting Act 1981, Criminal Justice Act 1987, Fraud Act 2006, Proceeds of Crime Act 2002, Housing Acts & the Money Laundering Regulations 2007 Cont d
tackling/preventing right to buy fraud Legal steps to combat right to buy fraud cont d Restitution Has the Defendant been enriched, or has received a benefit Was the enrichment unjust Was the enrichment at the expense of the Claimant
Case Law A note of caution when pursuing fraudulent misrepresentation Haringey LCB v. Hines [2010] A secure tenant, exercised right to buy In 2008, Haringey evidence that Hines was not in occupation at time and not entitled to exercise right to buy County Court Hines ceased to occupy and was not entitled to complete her right to buy. Rejected claim that lease was void and/or to rescind the lease for misrepresentation. Hines and Haringey appealed. Haringey s appeal dismissed. The local authority failed to put its deceit case to Hines in cross-examination
The End Five tips: Watch out for fraudsters & their many faces obtaining a property by deception in the form of identity fraud Use the court as a last resort Realise the power of the possession order Decisions may not always go your way Evidence and record keeping is key!
Questions? Thank you