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Landlords 'making millions from fraud'

Some of Britain's landlords have become housing benefit millionaires through fraudulent appropriation of social security funds, according to a report to be published this week, writes Catherine Pepinster.

Housing benefit was created to ensure that people on low incomes could afford to have a roof over their heads. Now more than five million people are claiming it, but it is being abused by private landlords who make applications worth thousands of pounds for fictitious tenants. Others are making huge profits from high rents for slum housing.

An inquiry by the Commons Select Committee on Social Security has discovered that the fraud has become so rife that up to 60 per cent of claims by some landlords are made on behalf of non-existent tenants. Large sums are also being defrauded from the public purse by unregistered managing agency companies.

Housing benefit fraud, says the committee, could be costing the taxpayer pounds 2bn a year.

Jim Gee, a housing benefit fraud investigator from the London borough of Haringey, who advised the committee, said: "These people are milking the system that is supposed to put a roof over the heads of the neediest members of society."

Since the sell-off of council housing in the Eighties and the relaxing of housing laws on eviction, the private rented housing sector has boomed, as businessmen have spotted a need for housing and realised that they can make money from it.

In 1980-1981 pounds 1.6bn was paid out in housing benefit, rising to pounds 12.2bn in 1994-1995, making it one of the biggest social security budgets.