Benefit crooks net £1,500 a week on luxury flats

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Posted on: 31/08/2011 11:31 by Andrew Hyatt
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Fraudsters from the EU are homing in on Britain to make millions from subletting plush apartments paid for by councils
With its manicured lawns and concierge service, Chatsworth Court seems ideal for the high-powered financiers and doctors who normally reside at the 1930s art deco development in Kensington, West London.

Yet some flats in the complex, which can sell for seven figures and look out over sports cars parked in the bays outside, are home to dozens of people living on housing benefit — some of them from other European countries.

Until recently, a 60-year-old Iraqi Kurd from Sweden was living there in a £1m top-floor flat with his six children courtesy of the British taxpayer.

He was receiving £765 a week in housing benefit for part of the time he was there and, over the course of three years, received almost £84,000. Meanwhile, his wife was simultaneously claiming thousands of pounds of welfare payments, including housing and child benefit, back in Sweden.

A Sunday Times investigation has found the scam is one of a string of housing benefit frauds that involve luxury properties and are swindling the taxpayer out of millions of pounds.

• Other tenants who have the rent on lavish homes covered by the state are earning up to £1,500 a week by illegally subletting the properties.
• Some claimants are exploiting lax checks by pretending they have “split up” from a spouse in order to acquire two properties on housing benefit. In truth, the couple continue to live together secretly while renting out one of the homes.
• In a few cases, fraudsters have even merged the scams to derive three different streams of income — housing benefit in Britain, subletting the property and milking benefits abroad through a spouse.

Last year the overall cost of housing benefit rose to £21.6 billion — the largest area of welfare spending apart from state pension payments. The annual cost of housing benefit fraud has almost trebled over the past five years to £290m. Critics regard that as a conservative estimate.

There is no statutory requirement for claimants to be interviewed in person and the onus is on the individual to alert their local council to any changes in their circumstances. Compulsory checks carried out by the Department for Work and Pensions (DWP) were scrapped in 2005.

“It’s a pay first, ask questions later system,” said a senior local government source.

At Chatsworth Court, about a quarter of the residents in the 200-apartment complex are understood to be on housing benefit.
Kensington and Chelsea council has so far exposed more than 35 cases across the borough of people simultaneously claiming benefits in Britain and in another European Union country. Other dual benefit claimants have come from Holland, Denmark and Finland.

The fact that EU residents are entitled to welfare on a reciprocal basis in member states has apparently led to some Russians disguising themselves as Poles.

None, however, has been prosecuted.
A source said: “From interviews and documents obtained during the course of investigations, officers believed that in many cases the intention was to get the housing benefit and then to return to their original EU country. They planned to either sublet the UK address or vacate the property while continuing to receive benefit into their bank account.”

This weekend, The Sunday Times traced the Iraqi man from Chatsworth Court, who cannot be named for legal reasons, to a council estate block in Gothenburg, where illegal subletting is believed to take place.

People inside a flat that bears his name on the letterbox refused to come to the door, but neighbours claimed it was occupied by a “young Kurdish couple” and their children.

The property is only a five-minute drive from a flat registered to a 30-year-old Arab man who fleeced Kensington and Chelsea council out of almost £7,000 in housing benefit in 2009-10 while claiming sickness benefit in Sweden.

Although welfare claimants in Britain have to prove “habitual residency” of about six months, dual benefit fraudsters from Europe have sought to circumvent the rules with false job references supplied by unscrupulous lettings agents aware of the scam.

The problem of illegal subletting by housing benefit claimants is most acute in some private developments close to Hyde Park in central London.

“It’s a massive multi-million-pound industry,” said Steve Allinson, a counter-fraud manager at Westminster council. “It seems to be getting worse every year, but we are now taking a zero-tolerance approach with police.”

Some claimants are subletting flats for which they receive about £600 a week in benefit for a staggering £1,500 a week in cash during the summer.

The rate is inflated because of the arrival of Kuwaitis seeking medical treatment in London who are paid a generous daily living allowance by their government. Tourists from other Middle Eastern countries shopping for presents ahead of Eid, the main Muslim festival, are also prospective clients.

Many of these short-term tenants do not realise they are involved in an illegal racket, but are usually told by unscrupulous agents acting as facilitators not to open the door to strangers. Some flats are used so frequently that they have Arabic signs inside warning guests to keep a low profile.
One of the main hubs of the “short-letting” trade is Park West, a 600-flat development close to Connaught Square, where Tony Blair, the former prime minister, has his home.

Investigators estimate that about 50% of the tenants at the development — owned by the family of Benzion Freshwater, who are valued at £895m on The Sunday Times Rich List — are receiving housing benefit. As many as 100 flats are believed to be sublet illegally.

Last week an undercover reporter approached Delta Properties, a lettings agency on the nearby Edgware Road, seeking to sublet a fictitious studio flat at Park West. Speaking in Arabic, he told Azzam Mohammed, one of the agents: “I have a Dutch passport. I get housing benefits.”

Advising him on a short-term let, Mohammed said: “You place Arabs [as tenants] and you tell them not to open the door ... You’ve got no problem ... If they’re westerners, they will expose you.”

Mohammed admitted there was a “risk” of getting caught, but suggested that he had “20 people” on housing benefit subletting their flats. “The best thing to do is to place a Saudi student,” he added, asking to see the property.

When confronted by The Sunday Times, Mohammed, who used a business card for Titania Properties, which previously operated out of the same address as Delta, denied subletting flats for housing benefit claimants. “I don’t do this stupid stuff,” he said. “It’s a crime.”

He claimed he immediately thought the reporter “looked dodgy”, adding: “What I was intending [to do] was to go to the flat, and once I had all the documentation I would have reported him to Westminster [council].” The owner of Delta was unavailable for comment.