Focus on right to buy

February 2017

Focus on Right to Buy

Right to Buy fraud is commonly observed to be when people provide false identification when making an application or a householder applies for a discount when they are not eligible. The impact of reacting to such fraud is financial, time consuming and has an impact on the level of housing stock available for social housing.

The National Fraud Authority (now National Crime Agency) identified that local authority tenancy fraud alone costs the public purse an estimated £845 million each year in temporary accommodation charges. Those who commit tenancy fraud deprive people who are genuinely in need from accessing social housing.

Some may be happy to investigate problems that come to light but given the complex nature of an enquiry, the time committed to a successful prosecution, not to mention the cost – traditional advice remains good in this area – prevention is better than cure!

What is Right to Buy Fraud?

Right to Buy fraud refers to any case where a tenant has applied for, or completed the purchase of a socially rented home under the Right to Buy scheme and has misrepresented their circumstances to either gain a discount they are not entitled to, or exercised the Right to Buy when they are not entitled to.

Is your organisation on the right track?

How can your organisation protect itself is a question worth asking – this fraud has a demographic nature but every organisation is vulnerable and the extent of effort committed to countering possible fraud should be seen as a risk versus reward conundrum.

This is however a minimum level of investment that is required in order to ensure that your organisation has the basic level of cover in terms of its first and second lines of defence:  Are our policies and procedures robust?  What assurances are available to confirm that Right to Buy fraud cannot represent a major threat to the business objectives.

Only buy asking these two simple questions can you be assured that the risk is contained within your risk appetite.

Copyright © Gateway Assure 2017 registered in England and Wales - MCH House, Bailey Drive, Gillingham, ME8 0PZ - Company number: 08232033

What should we be doing?

There is no perfect solution and local circumstances will dictate how particular policies and procedures are constructed. Here’s a simple guide as to the basics of what should be in place:  Develop a strategy for preventing Right to Buy Fraud, and include within your Right to Buy policies,  Educate staff and tenants regarding legislation and the implications of committing fraud,  Establish effective processes for carrying out verification checks on applicants,  Define roles and responsibilities in relation to prevention ensuring that appropriate supervision exists during the consideration and approval/rejection of the application,  Respond promptly to reports of Right to Buy Fraud,  Conduct appropriate publicity campaigns focusing on consequences,  Provide assurance to Board that the Right to Buy strategy is being correctly and fairly implemented, and  From a strategic view consider the portfolio mix of your stock and the type of tenancies on offer

The most common examples are:    

Misrepresenting the length of tenancy in order to gain a greater discount, Attempting to purchase a property whilst not using it as their sole or principal home, Not disclosing previous rent arrears, possession orders, transfers or evictions, and Misrepresenting the household composition for example submitting a joint Right to Buy application with someone who does not reside at the property or has not done so for the required period.

The Audit Commission in ‘Protecting the Public Purse 2012’ highlighted that Right to Buy fraud was an emerging risk and significant area of potential financial loss for local authorities. The increased discounts introduced in 2012 and 2014 has resulted in an increase in the number of Right to Buy applications and subsequently the Risk of Right to buy fraud occurring continues to increase.

A major government policy to extend Right to Buy to assured tenants of Registered Providers of social housing beyond those with preserved Right to Buy will extend eligibility to 1.3 million more families across the Country.

The extension was announced in October 2015 and reached through voluntary agreement between members of the National Housing Federation and government; the exact detail of the scheme is still to be developed.

It is normal practice to carry out verification checks on each application which include each applicant providing photographic identification (i.e. passport, photo card driving licence, armed forces ID card) and proof of address which must be no more than 3 months old and show name and current address (i.e. household utility bill, bank or credit card statement, tax document). The tenancy history and qualifying period should be checked by the member of staff acting as Right to Buy officer and the applicant could also be visited in their home by a housing officer to confirm living arrangements.

What help is available?

Gateway can provide a flexible service that can evaluate your existing strategy and processes, advise on improvements to meet best practice or conduct investigations into suspected cases of fraud.

For an informal discussion on how we can help please contact: Gbolahan Babalola, Local Counter Fraud Specialist – gbolahan.babalola@gatewayassure.com Copyright © Gateway Assure 2017 registered in England and Wales - MCH House, Bailey Drive, Gillingham, ME8 0PZ - Company number: 08232033