Illegal subletting – an ‘elaborate farrago of lies’

Poplar Housing & Regeneration Community Association Ltd v Begum & Ors [2017] EWHC 2040 (QB)

We are no fans of illegal subletting of social housing here at NL. So here is an appeal by the landlord of a county court decision to grant a suspended possession order (and no unlawful profit order) on a illegal sublet case. The decision was overturned, with, one might say, vim and vigour.

Ms Afsana Begum and Mr Mohammed Rohim were the joint assured tenants of Poplar Housing from October 2014. The property was a two bed flat. The rent was paid in full by housing benefit. In August 2015, Poplar received a tip off that the property was being sub let. On investigation, Ms B had financial links to another flat nearby, her mother’s.

Shortly afterwards, on 6 November 2015, the appellant referred the case to the Council’s fraud investigation team. Thereafter, the Council and the appellant planned, for obvious reasons, to conduct a joint and simultaneous inspection of the flat and of 33 Farrance Street to find out what was going on. These inspections duly took place on the morning of 12 November 2015. The officers were accompanied, as it happens, by a camera crew filming a documentary for the BBC. Viewers were not to be disappointed by what was revealed.

As the informant’s email had predicted, the respondents were not found at their own flat. They were, however, discovered to be at the first respondent’s mother’s home at 33 Farrance Street together with their two children. The respondents admitted at that stage, although they were to deny it later, that they were living at Farrance Street and had allowed others to occupy their own flat. This was a rare but ephemeral and uncharacteristic display of honesty on the part of the respondents which they were later quick to regret and to correct. The second respondent, however, soon reverted to his baser instincts and began to behave so aggressively towards the investigating officer that the police had to be called.

At the same time, two officers of the appellant visited the respondents’ flat. There they found one Ms Jannatul Rehana and one Mr Jahed Ahmed who, under caution, admitted occupying the flat from about August 2015 and paying a monthly rent of £400 to the respondents for the privilege. At the time of the visit, they were sleeping in the flat’s first bedroom but did not have access to the second bedroom which was padlocked shut. They said that the room, which contained toys and a cot, was kept locked in order, if necessary, to give the misleading impression that the respondents and their children were occupying the flat in the event that the premises were ever inspected.

Not long afterwards, the second respondent arrived at the flat. In an obvious and farcically clumsy attempt to cover his tracks he demanded that Ms Rehana and Mr Ahmed should leave. He promptly took the keys to the flat from them and purported to evict them. In a telephone conversation with Ms Rehana later the same day he threatened to burn their clothes.

When arrested, Ms B said she had only stayed at 33 Farrance Street over the night before to look after her brother who was suffering from a serious medical condition. Mr R gave no comment, but later told the police “We’ll see who laughs last when the case goes to court”.

Poplar served notice of seeking possession under Grounds 10, 12 and 14 of Schedule 2 to the Housing Act 1988, and notice to quit.

Before the trial came on, Mr R was again arrested.

on 20 May 2016, the police executed a search warrant at the flat and found the second respondent to be in possession of cannabis. They also found drug dealing paraphernalia including: scales, plastic dealing bags, SIM cards and cash. The second respondent was arrested on suspicion of possessing a Class B drug with intent to supply. On that occasion, he was aggressive and abusive towards the officers, using the vilest of language and threatening to get a friend to “sort them out”. In the event, in a procedural development not unknown in the criminal courts, the second defendant pleaded guilty to simple possession and was fined. It is in this context that I note in passing, although I do not hold it against the second respondent, that his counsel struggled readily to explain to me what legitimate use his client could have had for the scales and the dealing bags.

At first instance trial, the claim for possession on the basis that the Defendants had parted with possession of the whole and thus lost security of tenure failed, due to that locked room

This finding is not the subject of an appeal to this Court, although I pause to note that it is not without irony that the only part of the flat which the respondents kept under their control was the unoccupied bedroom full of toys to be deployed in the manner of a Potemkin village with which to deceive the appellants

The Defendants’ argument, that they had merely permitted distant relatives to stay at the flat temporarily, had not received any money from them, and were only absent from the flat from about 4 am on the morning of 12 November because Ms B had been summoned to care for her sick brother, was rejected put of hand. However, the Recorder made a suspended possession order. This was apparenly on the basis that the £400 per month received was less than the rent due to Poplar, and that this gave some weight to Ms B’s claimed reason for absence – looking after her ill brother.

On appeal, the flaw in this reasoning was clearly identified. The Defendants were receiving full housing benefit for the rent. The £400 per month was pure profit. This completely undermined what the Recorder had found to be the Defendants’ ‘altruistic motive’.

Putting it bluntly, I am entirely satisfied that the Recorder was taken in by the respondents. I make the following observations:
i) The respondents’ case was so clouded by a miasma of lies that there was no evidence to support the Recorder’s conclusion that they, with their children, had decided to move in with the first respondent’s mother for wholly altruistic reasons. Indeed, on their case, they had never moved in at all.

ii) If the real reason for moving in were to look after the first respondent’s brother, they could have done this without, at the same time, renting out their flat for profit to Ms Rehana and Mr Ahmed.

iii) It was but a short walk from the flat to the first respondent’s mother’s home, a fact which further undermines the conclusion that it was necessary for the whole family to decamp completely to allow the first defendant access to attend to her brother when needed.

An outright possession order was made in place of the SPO.

the sheer scale and persistence of the respondents’ initial fraudulent deceit aggravated by further and subsequent drug related offending wholly justifies the condign consequences of an outright order. I would stress that it is not compassionate to allow profiteering fraudsters indefinitely to continue to occupy premises and thereby exclude from such accommodation more needy and deserving families. In particular, in this case, there was a complete dearth of material which could amount to cogent evidence that the respondents would mend their ways in future. Accordingly, possession will be granted to take effect in 21 days from the date of this judgment.

On the Unlawful Profit Order, under section 5 Prevention of Social Housing Fraud Act 2013, the Recorder had been in error in the approach to the calculations under s.5(6)

(6)The maximum amount payable under an unlawful profit order is calculated as follows—
• Step 1
Determine the total amount the tenant received as a result of the conduct described in subsection … (4)(c) (or the best estimate of that amount).
• Step 2
Deduct from the amount determined under step 1 the total amount, if any, paid by the tenant as rent to the landlord (including service charges) over the period during which the conduct described in subsection … (4)(c) took place.

The Recorder had failed to take into consideration the housing benefit paid for the Defendants, and had therefore concluded that the amount received by the Defendants was less than the rent paid to Poplar.

I am satisfied that the total amount referred to under step 1 does not exclude the element of Housing Benefit. It is argued on behalf of the respondents that, on a strict interpretation of the statute, the Housing Benefit was not, in itself, received as a result of their breach of the tenancy agreement and so should be disregarded. I do not agree. The inclusion of the word “total” indicates that the gross receipts secured and consequent upon the dishonest relinquishment of possession should be considered under step 1. To hold otherwise would be to render all but nugatory the clear purpose of the section. A very considerable proportion of tenants in socially rented homes are in receipt of Housing Benefit and those who have their rents paid for them are those in the best position to be able to benefit from unlawful profiteering of this type. To disregard Housing Benefit under Step 1 but include it to the ill-gotten advantage of the fraudster under Step 2 would be to thwart the obvious intention of Parliament to provide a mechanism with which to strip him of his spoils.

It follows that the Recorder was wrong to conclude that the maximum amount payable under section 6 was zero and, in the absence of any material upon which I would be minded to reduce the amount payable, I award the sum of £1,550 under this head.

As with most social tenancy agreements, Poplar’s did of course enable the tenant to have a lodger – subject to permission by the landlord, so this is not a question of an unreasonable restriction. It is, as the High Court quite properly found, about people seeking to profit from social housing, in breach of tenancy terms and the the law.

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in assured-tenancy, Housing law - All, Possession, Unlawful eviction and harassment.

7 Comments

  1. Agreed, good judgment. Illegal subletting is morally wrong and creates a culture of general disregard for proper L&T practice. Look at Grenfell Tower for a dreadful example of where that can end up.

  2. No, but the numbers of missing people tell their own story, I think. Further, I believe that K&C have offered a recent amnesty to both Ls and Ts in this regard.

    • The govt offered an amnesty, precisely because it is not known. As such what is also not known is the numbers of missing people. It was assumed that it was a possibility that there may have been such sub-lets. You are putting the cart before the horse.

  3. And no amnesty to (illegal) landlords for, for instance, not carrying out right to rent checks. No amnesty for illegal sub-letting required for the sub-tenants because it isn’t an offence for them.

  4. The Recorder is in the wrong job, believing a tale such as that above. No wonder we have such injustices.
    Where a court decision has to be appealed, and the court decision is overturned, the cost of the legal funds for the appeal should be paid by the Ministry of Justice, as by default, its clearly an error on an employee of theirs ( the Recorder ) that caused / necessitated such costs.

  5. I used to work in social housing counter fraud. Mr Rohim sounds like a lot of people when caught out. So used to lying that they continue to lie in the hope of managing to blag their way out of the hole. The sheer brass neck of some people is astounding.

    I’m still not sure how the Recorder came to their decision about the suspended order. It’s like they didn’t understand how fraud works at all (or simple maths for that matter). Still, got there in the end.

    Not sure how the leap to Grenfell was made but Giles is spot on, it was out of concern for possible missing persons that they announced no repercussions for illegal sub-lets and illegal migrants in the tower block. They wanted to be able to identify the bodies and rule out the deaths of people who may have previously been in the building. There hasn’t been a single illegal sub-let identified to my knowledge.

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