Document Sample
					      Review of Illegal
   Subletting in the Royal
   Borough of Kensington
        and Chelsea

March 2010
Chairman’s Foreword

Being able to break new ground is always
pleasing and this Sub-Group certainly did
that.     From the start we discovered that
there were no agreed procedures as to how
to identify the problem. We therefore had to
“write the book” as we went along. All new
ideas were investigated and evaluated. The
conclusions are here for all to read. As a
consequence this Sub-Group took longer to
come to a conclusion than first had been

Perhaps our biggest disappointment is the
attitude     of    Central   Government    who
announced that they were going to launch an
initiative into illegal subletting and promised
guidance as how this should be done. Being
a year ahead of them, we made great efforts
to show them all that we have discovered and
better techniques they could introduce
                                                  Councillor Matthew Palmer,
nationwide. Unfortunately the Government            Sub-Group Chairman
choose to ignore our information and drafted
a guidance that looked dated and flawed. So
much more could have been achieved if they
had listened!

My thanks to my fellow Councillors on the
Sub-Group - Jeremy Edge, Tony Holt and
Bridget Hoier.

Also the research work for this Sub-Group
made heavy demands on a number of
Council officers.   The main officers who
assisted the Sub-Group are listed in
Appendix B but also we would like to place
on record our thanks to other staff such as,
for instance, the Postroom who cheerfully
distributed 2,000 plus letters.

We also thank the outside persons and
agencies who contributed to our research.

Councillor Matthew Palmer
March 2010

Index                                                        Page

Chairman's Foreword                                             2
The Review Report – Index                                       3
     Background                                                 4
     Principal Investigations and Findings of the Sub-
            Kensington and Chelsea Tenant Management            5
            Organisation (TMO)
            Registered Providers (formerly known as             6
            Registered Social Landlords (RSLs))
            Electoral Registration                              7
            Incentives and Data Matching - the Sub-Group's      7
            own Investigations
            Findings of the Sub-Group's Investigations          9
     Conclusions                                                9
     The Sub-Group's Principal Recommendations                 11

A    Statistical Summary                                       13
B    Sub-Group Membership and Meetings                         15

     THE REVIEW REPORT (in full)


1.   Due to growing concerns relating to possible illegal subletting within
     the Royal Borough, a Sub-Group (of the Overview and Scrutiny
     Committee on Housing, Environmental Health and Adult Social
     Care) chaired by Councillor Matthew Palmer was set up to ascertain
     the levels of subletting and to evaluate the different methods that
     might be employed to identify and deter potential tenancy fraud
     within social housing.

2.   Illegal subletting is a serious problem. At the time of the Sub-
     Group starting up, an article on subletting appeared in Private Eye
     Magazine (August 2008). It concluded:-

     Estimates vary about the extent of unlawful subletting. It's thought to be
     between 3% - 10% – anything from 147,000 properties up to a possible
     490,000. It comes as a shock to learn that, according to the Audit Commission's
     latest fraud figures, the UK's 474 local authorities managed to recover just 69
     sublet properties. Tackling the problems and having properties occupied by
     those in genuine need of social housing would not only help ease the housing
     waiting list, but would also help the government achieve its affordable homes
     target without having to build so many costly new properties. Government
     inaction in this area therefore remains incomprehensible.

3.   In its formative stages (in summer 2008) the Sub-Group's officers
     contacted the Institute of Housing. No substantive advice on good
     practice was found in a search of the Institute of Housing (and
     other relevant) websites. Therefore the Sub-Group itself had to
     evaluate the different methods that might be employed to identify
     illegal subletting.

4.   The relevant legislation on subletting is The Housing Act 1985
     (sections 93-94, also part 10). Section 93 is repeated below:-

     93.     Lodgers and subletting.

     (1) It is a term of every secure tenancy that the tenant—
     (a) may allow any persons to reside as lodgers in the dwelling-house, but
     (b) will not, without the written consent of the landlord, sublet or part with possession of part
     of the dwelling-house.
     (2) If the tenant under a secure tenancy parts with the possession of the dwelling-house or
     sublets the whole of it (or sublets first part of it and then the remainder), the tenancy ceases to
     be a secure tenancy and cannot subsequently become a secure tenancy.

     The Sub-Group considered the relevant section of the legislation in
     detail. As also referred to in the Recommendations below, the
     Sub-Group's view is that the legislation made it difficult to enforce
     subletting rules and needs tightening.

5.   The account of the investigations below describes (in summary) a
     lengthy and painstaking review. The Sub-Group sought hard and
     by a variety of methods to find where illegal subletting was taken
     place in the Royal Borough. The report below gives only a flavour
     of protracted discussions over measures such as offering incentives
     for instance. (The Regulation of Investigatory Powers Act 2000
     (RIPA) regulates the powers of public bodies to carry out
     surveillance and investigation.      The Sub-Group considered the
     possibility of the use of a Covert Human Intelligence Source (CHIS),
     as defined by the Act, but in the face of unequivocal legal advice
     that a CHIS would not be authorised the idea was abandoned.)

     Principal Investigations and Findings of the Sub-Group

     Kensington and Chelsea Tenant Management Organisation

6.   When the Sub-Group commenced in the summer of 2008, Helen
     Evans (former Chief Executive of the TMO) had thought that the
     level of illegal subletting was greatly exaggerated and this
     viewpoint appears to have been borne out by the Sub-Group's
     subsequent investigations.

7.   In December 2009 our TMO representative informed the Sub-Group
     that the TMO currently has 23 live housing fraud cases logged on
     our system, 8 of which relate to cases of suspected subletting. All
     of these have been referred by Neighbourhood Officers to the
     specialist joint-funded Housing Fraud Investigations Officer within
     RBKC Corporate Investigation Group for further investigation.

8.   It was a concern of the Sub-Group that modern methods of estate
     management and rent collection meant there were less people
     constantly on the ground who know the tenants and who could pick
     up irregularities - porters, caretakers and the like. This makes it
     more difficult to find illegal sub-lets. Our TMO representative
     informed and reassured us that the TMO uses the following
     methods to prevent/deter illegal subletting:-

     (i) Target of 10% tenancy audits/visits – to be raised to 25% in
     (ii) Advertising of TMO hotline to deter subletting & encourage
     reporting of instances;
     (iii) Advertising joint TMO/RBKC anti-fraud investigations to deter
     (iv) Photographic identification at tenancy sign-ups (although not
     digital); and
     (v) Data-matching exercises with RBKC. As an additional example
     of partnership working, the Royal Borough Internal Audit and the

      TMO have agreed to match fund the post of Housing Investigator
      for 12 months in July 2009.

9.    No doubt in part prompted by the work of this Sub-Group, we have
      been pleased to hear of recent efforts made by the TMO to further
      deter illegal subletting. The TMO has recently reorganised its
      structure to ensure that Neighbourhood Officers spend more time
      out and about on the estates in order that they get to know their
      patch. Also, with regards to information gathering on its tenants,
      the TMO has made a determined effort to collect both mobile
      numbers and email addresses since November 2009. These are all
      moves in the right direction.

      Registered Providers (formerly known as Registered Social
      Landlords (RSLs))

10.   At an early stage the Sub-Group made contact with the ten largest
      Registered Providers in the Royal Borough (listed below) seeking to
      tap into their knowledge and expertise:-

      Family Mosaic
      Guinness Partnership
      Kensington Housing Trust
      Notting Hill Housing Group
      Octavia Housing & Care
      Peabody Trust
      Servite Houses
      Southern Housing Group
      William Sutton Homes; and
      Women's Pioneer Housing Ltd.

11.   The Registered Providers were keen to offer their co-operation with
      the Royal Borough and the Sub-Group carried out a questionnaire
      survey with them. As a typical response the Kensington Housing
      Trust stated it had not discovered any recent subletting despite
      public opinion to the contrary. The Women's Pioneer Housing
      Limited was not aware of there ever being any cases of illegal
      subletting in its flats in the Royal Borough.

12.   In summary of the responses received, none of the Registered
      Providers told the Sub-Group anything contrary to this general
      pattern. The Sub-Group was trying to get a picture of illegal
      subletting in the Borough but it has proved difficult to get a clear
      picture partly at least due to the lack of good practice from Central
      Government or the Institute of Housing. A number of very useful
      examples of good practice were informed to the Sub-Group by the
      Registered Providers.

13.   At the Sub-Group's meeting in May 2009 an officer from the Family
      Mosaic Housing Association visited. The Sub-Group shared the
      following points of general good practice from her visit:-

      (i) Documents sought by Mosaic when investigating possible
      subletting cases included:-
      - passport
      - driving licence
      - utility bills
      - GP/Hospital letters
      - payslips
      - bank statements
      - Housing/Council Tax Benefit letters.

      (ii) At a certain (advanced) stage in any investigation Mosaic would
      commission a solicitor to take over the case. These solicitors would
      often hire private investigators.

      (iii) Mosaic's housing officers work hard at building up good
      relationships with its tenants. Mosaic's Gas Safety Team was also
      vigilant in respect of anything untoward. Mosaic issues Photo ID
      cards to its tenants at the time of sign up.

14.   The Sub-Group is grateful for the goodwill received from all of the
      Registered Providers that were approached.

      Electoral Registration

15.   The Sub-Group talked to the Council's Electoral Registration
      Section. The Sub-Group suggested the possibility of closer links
      with the Corporate Investigations Group and of a representative of
      this Group speaking at the annual briefing session(s) for electoral

      Incentives and      Data   Matching     -   the   Sub-Group's    own

16.   The Sub-Group requested and received authorisation (and the
      resources) to conduct its own investigations. The locations of St
      Charles Ward and a small part of Golborne Ward (both of which are
      in the Northern part of the Borough) were selected and following
      discussions two main methods considered for analysis; an incentive
      scheme and data matching.

      [DEFINITION Data matching is any exercise involving the
      comparison of sets of data to determine how far they match. Its
      use in respect of fraud detection is to identify suspicious anomalies,
      patterns or trends].

17.   Incentives – letters were distributed to residents of St Charles and
      Golborne Wards asking for information regarding the illegal
      subletting of Tenant Management Organisation (TMO) and
      Registered Provider properties.

18.   Following the initial correspondence a period of three weeks elapsed
      before a second letter was sent offering residents £200 for
      information that would lead to the successful repossession of TMO
      or Registered Provider property as a result of tenancy fraud. With
      both of these letters we supplied the residents with a prepaid
      envelope to assist them in replying. The Sub-Group placed sensible
      restrictions on these rewards - the information had to lead to the
      successful eviction of a tenant who had let out their property
      without authorisation. We had a £10,000 maximum total payout.

19.   Data matching -at the same time the letters were dispatched,
      tenant data was gathered from TMO and Registered Provider
      records. This was then matched against Council records including
      Council Tax, Electoral Register, Housing Benefits and Residents
      Parking in order to identify anomalies.

20.   The letters generated 24 referrals and the data matching 28

21.   These were passed to the Council's Investigation Group to
      undertake further investigatory work which included financial
      investigations and visits without notice (early morning, late evening
      and weekend).

22.   At the point that the methods above had been exhausted, the Sub-
      Group came up with the innovative idea of the use of a courier
      service at properties where officers failed to gain a response. This
      was found to be a very successful method of gathering intelligence,
      identifying genuine tenants who had concerns in opening the door
      to unnotified visitors, as well as raising a greater suspicion upon
      those who failed to contact the courier for a re-delivery.

23.   Experience has shown that sub-letters, as well as some genuine
      tenants, do not always open the door to unexpected callers,
      although delivery persons are one type of visitor tenants do
      respond to.

24.   Parcels, for each tenant, were constructed and provided to the
      courier service, along with strict instructions to only ask for the
      named tenant, and to leave a calling card if no response was gained
      when they visited.

25.   Tenants signed for the parcels, using an electronic pad which
      enabled the couriers to send an image, via email, direct to the

      Corporate Investigation Group, in real time. These signatures were
      in turn checked to Council and TMO/Registered Provider records.

26.   In many cases genuine tenants replied, although there were a few
      where no contact with the Courier was made, providing valuable
      intelligence regarding the genuine tenant’s residency.

      Findings of the Sub-Group's Investigations

27.   Significant results are detailed below.

      (i) A property on the Peabody Estate, Dalgarno Way was found to
      have undeclared lodgers at the address. Although investigations
      discovered that part of the property was sub-let, the tenant was
      still resident at the address. Evidence presented to Registered
      Provider for their consideration. (source: data match)

      (ii) A property on the Peabody Estate, Dalgarno Way, was
      eliminated from enquiries following an early morning visit. Whilst
      no sub-let was unearthed officers did find a second adult at the
      address and single person discount removed. (source: data match)

      (iii) A property in Sunbeam Crescent was been eliminated from any
      sub-let enquiries after the tenant was seen at the property following
      a visit with the police (Operation Crosscut).          However, an
      undisclosed partner was also present. This resulted in a £2,300
      overpayment and the female claimant received a Formal Caution.
      (source: data match)

      (iv) Notice to quit was been served on two TMO properties. One
      property in Trellick Tower was recovered.               Following an
      investigation and interview by the Corporate Investigation Group
      the tenant returned the keys. The other case is still awaiting a court
      date. (source: data match)


28.   The results from this operation suggest that subletting within the
      Royal Borough is lower than initially thought possible and that
      subletting is extremely difficult to detect through pro-active drives
      such as data matching.

29.   Whilst not as widespread as previously thought possible, the
      subletting of social housing within the Royal Borough is however
      still an issue, especially if compared to the reactive investigations
      undertaken by the Corporate Investigation Group, where 14 TMO
      properties and 4 Registered Provider properties have been
      recovered in the last 12 months.

30.   This has also been highlighted by both the Audit Commission, in
      their recent report Protecting the Public Purse (where the
      Commission believe that tenancy fraud is estimated to have
      reduced available social housing by nearly 50,000 properties) and
      by the Housing Minister John Healey’s announced crackdown (in
      August 2009) on social housing tenants who unlawfully sub-let their
      properties or obtain them through fraudulent means. The Sub-
      Group was pleased to note that RBKC would be applying for the
      £50,000 to be made available to each London Borough to tackle
      illegal subletting.

31.   The incentive scheme tried by this Sub-Group was not seen as a
      success, and given the economic situation some of the referrals
      generated may have simply been individuals hoping to get a reward
      even though their information was wrong or in some cases badly

32.   One final area of weakness identified by the Sub-Group was the
      Housing Act which was last reviewed at a time when social housing
      was not as scarce as today, and seems to favour the tenant even in
      cases where subletting or non-residency has been proved.

33.   For example, where a tenant has been found to sub-let their
      property and a notice to quit issued by the landlord, if they can
      show that at some time in the future they intend to return to the
      property, then there is a strong possibility the court will find in their

34.   Despite a great deal of effort by the Sub-Group not much illegal
      subletting had been discovered. Additionally, the Sub-Group has
      found that at present there was no real deterrent. The Sub-Group
      have found community support for action against illegal subletting
      but not much in the way of actual tip offs. Nevertheless there are a
      number of valuable recommendations that the Sub-Group feel able
      to make.

      The Sub-Group's Principal Recommendations

35.   The Sub-Group's main recommendations are as follows:-

      Recommendations 1. to 8. are directed at local authorities /
      housing providers.

      1.   To provide significant incentives for tip offs regarding
      unauthorised subletting. This Sub-Group tried £200 which was
      not successful; the Government are now recommending £500.
      Sensible conditions need to be applied.

      2.    To employ the data matching technique as described in
      more detail above. As well as illegal subletting, we discovered
      offences such as housing benefit fraud through the data matching
      technique. The Sub-Group recommend it for any form of serious

      3.    To make use of Oyster Cards for evidence purposes.
      These provide an excellent record of a person's movements. We
      believe that a genuine tenant would be happy to submit this

      4.   The use of a courier service tactic. As detailed above the
      Sub-Group recommend use of this innovative technique.

      5.   To foster close relationships with tenants.

      6.     Housing Providers need to give thought to how to
      improve their record keeping and carry out robust tenant
      checks. It is a step in the right direction that in 2010/11, the TMO
      is increasing its formal inspections to 25% per annum (from 10%
      formerly). In addition, the Sub-Group is pleased to hear that the
      TMO verifies tenancies through other housing activities for example,
      from March 2010, the TMO's main repairs contractor will be
      collecting profile information against named tenants.

      7.    Digital photographs should be used by all forms of
      Landlord to establish and validate a tenant’s identity. These
      photos need to be in a format that can be downloaded and printed
      hard copy and held on hand held devices.

      8.    Closer links with the Council's Electoral Registration
      Team.       For instance, a representative of the Corporate
      Investigations Group speaking at the annual briefing session(s) for
      electoral canvassers.

Recommendation 9. is directed towards Central Government.

9.    The Housing Act – The Act only carries two criminal charges
(s.117 and s.214) and both are concerned with false statements
being made by persons undertaking a Social Housing tenancy.
There are no provisions for the unlawful subletting of Social Housing
for personal gain. Written at a time when there was adequate
Social Housing the Act itself requires a review.

(i) Data matching

     3131 Names on the Electoral Register
                 Compared to
          2679 Tenancy Agreements
              160 Discrepancies
 Compared with Housing Benefit and Council Tax
               30 Discrepancies
    Were any of the Addresses legitimately
            forwarding their mail
               28 Discrepancies
   Compared with Residents Parking Permits
               28 Discrepancies
              All visited 3 times
   1 case of Council Tax Fraud        1 case of Housing Benefit Fraud

                   10 Discrepancies
                Couriered Parcels sent
                    3 Discrepancies
                Further Investigations
            1 Illegal Subletting identified
                  1 Recovery Pending

(ii) Tip Offs

        3131 Names letters are sent to
                    22 tip offs
  Addresses compared to the Electoral Register
               20 Discrepancies
 Compared with Housing Benefit and Council Tax
               10 Discrepancies
   Compared with Residents Parking Permits
               10 Discrepancies
               All visited 3 times
                5 Discrepancies
             Couriered Parcels sent
                2 Discrepancies
             Further Investigations
            No Subletting identified



The membership of the Sub-Group comprised:

Councillor   Matthew Palmer (Chairman);
Councillor   Jeremy Edge;
Councillor   Bridget Hoier;
Councillor   Tony Holt

Officer support

The main officers supporting the Sub-Group were:

Stan Logan - New Initiative Manager, Housing;
Janet Seward - Business Improvement Manager, TMO;
John Barnett - Senior Audit Manager;
Andrew Hyatt - Corporate Investigation Group Leader;
Ahmed Farooqui - Scrutiny Development Manager;
Gareth Ebenezer - Governance Services was the          Sub-Group's

Other involvement or contributions

Other Council Departments
Registered Providers in the Borough

Sub-Group meeting dates

The Sub-Group met from June 2008 onwards.