Local Authorities in the West Midlands have launched investigations into Right-to-Buy fraud, after it emerged 205 applicants who bought their council houses under the Right-to-Buy scheme in Sandwell and Dudley had previously been in receipt of housing benefit.
Sandwell Council’s counter-fraud unit is currently investigating 94 cases of council houses bought as Right-to-Buy properties, in which the tenants were previously receiving housing benefit. A total of 46 Right-to-Buy tenants who bought their council homes had been in receipt of full housing benefit entitlements.
The Express and Star reports that between 1 April 2012 and 28 April 2014, the council sold 481 properties under the Right-to-Buy scheme.
There has been a sharp increase in Right-to-Buy applications over the last few years, possibly as a result of an increase in the discount threshold for council properties bought by occupying Local Authority tenants.
Outside London, some Local Authorities are offering discounts of up to £75,000 on council properties under the Right-to-Buy scheme.
However, there are fears that some of the transactions may be fraudulent – or Right-to-Buy property transactions could even be being used for money laundering purposes.
In Sandwell, counter-fraud investigations have resulted in seven Right-to-Buy applications being cancelled or withdrawn, involving transactions amounting to a total of £321,750.
The head of Sandwell Council’s financial department, Councillor Steve Eling, said that although not all Right-to-Buy transactions involving housing benefit claimants were fraudulent, the fact that some of the tenants previously were unable to afford to pay the full rent on their council homes and were in receipt of full housing benefit entitlements did raise “alarm bells”. Cllr Eling said:
“We’ve had a couple of incidents where we’ve identified money laundering –
where it looked like dirty money was coming from abroad to fund the purchase of council houses.
“On the face of it, it looks like the level of discount is such that it makes it a lucrative trade for criminals.
“We are seeing what looks like an increased number of potential fraud cases,” he added.
“We stopped some before they have happened – there are a number which are being looked at, and we are reviewing some cases where Right-to-Buy has gone through, but we think they might not be as they seemed.”
Dudley Council said that out of 111 council homes bought by housing benefit claimants under Right-to-Buy, 11 cases are currently being investigated and one transaction has been cancelled as fraudulent.
A total of 330 council homes were bought under Right-to-Buy in Wolverhampton – although there are no figures on how many of the buyers were receiving housing benefit.
Walsall Housing Group has completed 130 applications, with none having been found to be fraudulent.
Cllr Gaye Partridge – who is responsible for housing in Dudley – said:
“We check all Rights-to-Buy – and if we think there is any possibility of any fraud, then they are investigated by our specialist fraud team.”
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