A credit reference company has warned that much more needs to be done to combat tenancy fraud as new figures reveal that the number of detected cases of the crime increased by 70% in 2012.
Using data obtained from councils under the Freedom of Information Act, Callcredit Information Group's (CIG) research builds on a report it published last year that showed 90% of all tenancy frauds went undetected in 2011.
The Audit Commission estimates that around 98,000 social homes in England could currently be subject to tenancy fraud, compared to 50,000 in 2009. The cost across councils and housing associations to the public purse has now risen to an estimated £1.8 billion a year, up from £1bn in 2012.
Callcredit's research also reveals that:
• Over 80% of local authorities still don’t have a dedicated fraud team in place.
• The number of cases of fraud detected for non-occupation as principal home has increased to 43%.
• The number of unlawful subletting fraud accounted for 32% of cases.
• 5% of cases accounted for wrongful succession.
However, the firm also found some positive action was being taken. Over 1,000 detected cases resulted in court action, with a further 1,700 cases resulting in the property being recovered by the council in question. And 76% of detected cases resulted in successful recovery compared to 60% in 2011.
The research found that, though not the most prominent type of tenancy fraud, the issue of illegal sub-letting still remains an issue with over 900 cases detected in London alone.
There has also been a rise in the number of fraudulent right to buy applications. Sub-letting a property and successfully purchasing it via a right to buy scheme can attract discounts of up to £100,000 in England.
Andrew Davis, CIG's director of public sector, said: “Our research continues to show that whilst improvements have been made there is still a long way to go to tackle tenancy fraud.
"The problem is extensive and is happening across the country but by working together it can be tackled. The first step is realising that it can’t be tackled in isolation and acknowledging that the true value of data is derived from the insight it delivers, insight that can only be maximised when data is shared between local authorities and enhanced by third parties like Callcredit.
“One simple fact emerges from the research. Whilst there is some excellent work being undertaken across the country, if just a further 20% of local authorities introduce dedicated fraud teams the return to the tax payer would be in the region of £200m - £300m p.a.”