The Prevention of Social Housing Fraud Act comes into force tomorrow (Tuesday 15 October 2013) in England only. The text of the Act is here. A key point is the introduction of ‘Unlawful Profit Orders’, which get around the decision of the Court of Appeal in Sumal v Newham London Borough Council [2012] EWCA Crim 1840 that confiscation of rent was not possible because ‘the continued receipt of the rent was not the product of the appellants crime’. (Admittedly that was a prosecution for an unlicensed property in a selective licensing area under section 95(1) of the Housing Act 2004, but the point about confiscation not being enabled under statute had broader application).
So, new criminal offences for secure and assured tenants of sub-letting the whole, or part without the landlord’s consent (and ceasing to occupy as only or principal home).
Note that it is an offence whether committed with dishonest intent or not. The only knowledge required is that it was a breach of express or implied terms of the tenancy agreement.
For a ‘not dishonest’ sub-letter, the punishment is a fine not exceeding level 5 on the standard scale. For the dishonest one,
(a)on summary conviction, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum (or both);
(b)on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both).
The local authority can prosecute, whether it is the landlord or not.
The Unlawful Profit Order is at Section 4. On conviction, the Court must consider whether to make such an order. The maximum amount payable is rent received, less rent and service charges paid to superior landlord, received as a result of the offence (or best estimate thereof), payable to the social landlord (although see also 4(7)).
The Unlawful Profit Order even takes precedence over payment of a fine – s.4(9).
What is more, Unlawful Profit Orders can also be made in civil proceedings – s.5.
Thankfully shared ownership leases are excluded, s.2(3)(b).
There is also no offence where:
the tenant takes the action described in paragraphs (a) and (b) of that subsection because of violence or threats of violence by a person residing in, or in the locality of, the dwelling-house—
(a)towards the tenant, or
(b)towards a member of the family of the tenant who was residing with the tenant immediately before the tenant ceased to occupy the dwelling-house.
Or where the occupier (sub tenant) could apply for an order transferring the tenancy to them or to another person for their benefit.