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GOVERNMENT CLOSING THE DOOR ON LANDLORD FRAUD

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Greedy landlords who milk millions of pounds in housing benefit fraud will be targeted in a new government crackdow...
Greedy landlords who milk millions of pounds in housing benefit fraud will be targeted in a new government crackdown.

Fraud minister John Denham has outlined a six point programme to make it easier to both spot and stop lawbreaking landlords and managing agents, who are part of the£1bn housing benefit scam.

The measures, which include three new proposals being implemented shortly, are:

-- new powers to stop direct payments to landlords where fraud is suspected

-- new powers to suspend payment and make recovery of fraudulent overpayments easier

-- new powers to obtain information to identify all residential properties owned by those landlords suspected of impropriety who may receive direct payments of benefit - allowing greater cross matching of claimant data and quicker spotting of multiple fraud claims

-- data matching exercises to check claims and claimants across the benefits system and with other government departments

-- a trial to intercept housing benefit cheques redirected by landlords through the postal system

-- initiatives to shift the emphasis by local authorities from detection to prevention of fraud

Speaking to the Chartered Institute of Housing in Scotland, Mr Denham said:

'We are keeping our manifesto commitment to crack down on dishonesty and maintain action against all types of benefit fraud, including landlord fraud.

'We are taking strong action to build a modern, fair and secure social security system.

'For too long unscrupulous landlords have been able to milk the benefits system. These new measures send out a clear signal that such frauds will no longer go unchallenged.

'The new rules underline how central and local government can work together in constructive collaboration to tackle the challenges of fraud, particularly among landlords.'

Some recent successful prosecutions against fraudulent landlords include:

-- a 12 months jail sentence against one landlord who swindled£11,600 in housing benefit

-- a 15 months prison term for a landlord whose false accounts included£6,000 in stolen housing benefit

-- Operation Rigsby which achieved 52 prosecutions and produced weekly benefit savings of around£1m

-- a benefit/mortgage fraud sting in Scotland which uncovered nearly£100,000 in weekly benefit savings in just three months

-- a typical scam involved a customer who was in receipt of DSS and housing benefit falsely applying and receiving a£23,000 mortgage by giving false employment details. He then claimed housing benefit for the property from the local authority by claiming to be a tenant at the property.

NOTES

1. The government's anti-fraud strategy is built on three principles:

fairness: restoring public confidence in a secure social security system which ensures that benefits go to those who need them, and not to those who seek to profit at the expense of the needy;

responsibility: fraud is anti-social behaviour which is contrary to responsible citizenship; assisting in the drive against fraud is an expression of responsible citizenship

honesty: ensuring public confidence in a social security system that deals effectively with those who act dishonestly.

2. The government's six point programme includes three new sets of regulations which will be laid before parliament very shortly. Their purpose is described below.

3. The Housing Benefit (Information from Landlords and Agents) Regulations 1997 The Regulations implement section 11 of the Social Security (Administration) Fraud Act 1997. They will enable authorities to obtain and assemble information from landlords and agents about them and any residential properties they own, control or manage, anywhere in the United Kingdom, which will make it easier to gather evidence in support of an investigation into fraud. The new powers should also help authorities to uncover multiple frauds from a single lead.

The new powers allow information gathered by an authority to be cross-checked for inconsistencies against existing benefits administration information and also for it to be checked against information gathered and held by other local authorities. Any information gathered under the Regulations may be used by local authorities or their contractors only in exercise of their functions in relation to housing benefit or council tax benefit.

Information will be required from those landlords and agents who are in receipt of, or who are being considered for, direct payments of housing benefit in respect of a tenant and, additionally, only where the local authority or contractor suspects that there may be some impropriety in connection with a claim for housing benefit involving that landlord or agent's property.

Landlords and agents will be required to supply information to identify all properties they own, control or manage.

Where properties are owned or run by limited companies, the information required will extend to the details of the company, its ownership and any associated companies.

Managing or letting agents may be required to supply details of the responsible landlord and may also be asked to give details of other residential properties they manage.

The Regulations make it a criminal offence (under the existing provisions in section 113 of the Social Security Administration Act 1992) to fail to supply information.

This offence carries a maximum penalty, on summary conviction, equivalent to level three on the standard scale

- currently£1,000 - and, where the failure to comply continues after conviction, a fine of£40 for each day on which that failure continues.

4. The Housing Benefit (Recovery of Overpayments) Regulations 1997 The Regulations implement section 16 of the Social Security (Administration)Fraud Act 1997. The section extends authorities' powers to recover overpayments of housing benefit by allowing recovery from direct payments to landlords in respect of other tenant's housing benefit. It also allows a housing benefit overpayment to be treated as a proof of debt for recovery purposes by the courts.

Section 16 will create circumstances where it is inappropriate to allow a rent account to fall into arrears and thus jeopardise the tenancy. The section has an in-built protection for tenants. The Regulations also give the same level of protection in certain circumstances where recovery is made from direct payments in respect of the tenant to whom the overpayment relates.

The Regulations also provide for new notifications to be sent to landlords and tenants in certain cases.

5. The Housing Benefit and Council Tax Benefit (General) Amendment Regulations 1997

The Regulations will:

-- tighten up arrangements for paying housing benefit direct to landlords by enabling local authorities to refuse or terminate direct payments if the landlord is not 'fit and proper'* to receive housing Benefit, with a discretion to withhold benefit whilst enquiries are made about the landlord's 'fitness' to receive housing benefit directly from the local authority

-- require local authorities to notify landlords paid direct of their duty to report known changes in the claimant's circumstances

-- enable local authorities to suspend Housing Benefit/Council Tax Benefit where a question arises about entitlement, linked to a provision for requiring the necessary information

[*'Fit and proper' - It will be for each authority to decide, based on past fraudulent activity, a history of failing to report where a tenant has vacated theaccommodation, or a history of failing to repay overpayments that the authority decided were recoverable from him, whether a landlord is fit to receive payment of housing benefit directly.]

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