Barking and Dagenham Council has successfully recovered eight properties in the second quarter of the 2025/26 financial year due to instances of subletting and misuse. This brings the total number of properties recovered in the first half of the year to 14.
The council's Counter Fraud and Risk Manager, Kevin Key, reported that the problem of illegal subletting and misuse of properties is significant and could potentially affect hundreds of properties. The team has increased its capacity and is on track to exceed last year's caseload for corporate investigations.
Financial Impact and Prevention Measures
Savings achieved through fraud prevention and property recovery in Quarter 2 totalled £80,900. This includes cumulative benefits from Right to Buy checks and succession prevention. Income is also being generated via a Service Level Agreement with BD Reside, which supports reinvestment into counter-fraud activities. However, ongoing investigations and legal actions may incur costs for enforcement and court proceedings. Failure to maintain robust counter-fraud measures could expose the Council to significant financial losses through tenancy fraud, corporate fraud, Right to Buy abuse, and misuse of public funds.
The council's strategy for preventing future instances includes strengthening controls around property allocation, with multiple systems requiring completion for a property to be allocated and a separation of duty at multiple points. These processes are considered to be of a high standard for the council's own stock. For BD Reside properties, there are close working relationships with property managers to conduct tenancy audits and checks. The council is also adopting a more 'hard-line approach' with platforms like Airbnb, which may involve court action, and is exploring pan-London collaboration to address this issue. Additionally, the council is reviewing its counter-fraud policies and strategy annually to ensure they remain robust and aligned with legislative changes and updated guidance. This review is part of the council's commitment to good governance, as outlined in documents such as the Review of Counter Fraud Policies 2025 and the Counter Fraud Strategy 2025 - Draft.
Identifying and Investigating Misuse
Suspected cases of subletting and misuse are identified through various means, including referrals received by the Counter Fraud Team. These referrals are logged and assessed independently, with decisions made on the best course of action, which may involve opening an investigation, referring to another service block, or referring to a specific manager for action. For housing investigations, regular monthly reviews are undertaken to ensure only those who qualify and have provided correct information are given a tenancy. The Counter Fraud Team also works with BD Reside property managers to conduct tenancy audits and checks.
Beyond subletting, misuse of properties includes obtaining them by deception. One property was recovered because the tenant had sublet it, and another was recovered because the tenant had obtained the property by deception. In the context of council-owned properties, misuse encompasses both subletting and obtaining properties through fraudulent means.
Consequences for Tenants
Tenants found to be illegally subletting or misusing properties can face eviction through legal action. In some instances, tenants have returned keys without the need for legal action after being served notice. The report also mentions that if fraud by employees is indicated, disciplinary action will be taken in accordance with the Council's Disciplinary Rules, which could involve criminal or civil proceedings.
Scale of the Problem
The scale of housing fraud is described as 'very big,' potentially affecting 'hundreds of properties.' The council is working through as much information as possible, and the investigation is evidence-led. For council-owned stock, a different procedure and process are in place to obtain tenancies, and this has been reviewed, spot-checked, and audited. Controls are in place to prevent the same issues seen in BD Reside properties from occurring in council stock. The council is also looking at different ways to deal with Airbnb, which may involve court action, and is working closely with BD Reside on this. Regular tenancy audits and checks are conducted on BD Reside properties.
While eight properties were recovered in Quarter 2, bringing the total across the first six months to 14, a specific number of properties that were sublet or misused but not recovered is not provided in the report. The Counter Fraud 25-26 Quarter 2 Report provides further details on these investigations.
