Social housing tenancy fraud crackdown aided by landmark Norwich Pharmacal Order ruling

Out-Law News | 20 Sep 2022 | 2:17 pm | 2 min. read

A landmark ruling by the High Court in London will pave the way for local authorities in England to combat social housing tenancy fraud more effectively using civil fraud court procedures, an expert has said.

Andrew Herring of Pinsent Masons was commenting after Kensington and Chelsea Council won a court order that will enable it to access certain payments data held by accommodation booking platform Airbnb. Pinsent Masons acted for the council, which will use the data to identify cases of illegal sub-letting of social housing.

“The ruling shows that civil fraud court procedures can be used in a new and innovative way – to support data-led public sector efforts to investigate and combat fraud,” Herring said.

Kensington and Chelsea Council told the High Court that demand for social housing within its borough outstrips supply – a position replicated in many other local authority areas across England. In a bid to ensure that all available social housing stock is accessed by those who need it and address the cost involved in temporarily re-housing people awaiting social housing, the council has been seeking to crackdown on illegal sub-letting of social housing properties in its borough.

Illegal sub-lets are sometimes arranged through online platforms. However, the council said that obtaining conclusive information that a social housing property is being listed in this way on such platforms is difficult. This is because the photographs of each listing are of the interior of the property, not the exterior, and the specific addresses are not listed until a booking is paid for. It said enforcement action can be further hampered by a lack of resources, a lack of cooperation from the tenants in question and their neighbours, and the very nature of investigating a situation where individuals of interest are necessarily absent from the property.

In a bid to overcome those challenges and identify the perpetrators of tenancy fraud, Kensington and Chelsea Council applied to the High Court for a ‘Norwich Pharmacal’ order (NPO) to be granted against Airbnb Payments UK.

An NPO is a type of court order available in England and Wales which allows information to be obtained from third parties to enable a victim of wrongdoing to take effective legal action. NPOs are often used where a victim of wrongdoing does not know the identity of the wrongdoer but can point to an innocent third party caught up in the alleged wrongdoing who has this information. They can also be used to trace assets and obtain other information needed by the victim to put together its case against the wrongdoer. 

Airbnb did not oppose the NPO application but cited the need for a court order to justify disclosure of the information the council sought. The case sets a precedent that other social housing landlords may use to investigate tenancy fraud in their regions.

The NPO the High Court granted Kensington and Chelsea Council covers names and addresses of Airbnb users who have advertised a social housing property within one of two estates in North Kensington. It also requires disclosure of sums those people received for any rental bookings, and the transaction history for the property. A time limit on the data search also applies.

Councillor Kim Taylor-Smith, lead member for Housing at Kensington and Chelsea Council, said: “There is a huge demand for social housing in our borough and it’s simply not fair that people in genuine need are being denied a place to call home because others are illegally sub-letting their council properties to make money. Tenancy fraud is not a victimless crime.”

Amanda Cupples, general manager for Northern Europe at Airbnb, said: “Hosting in subsidised or social housing in the UK is illegal and has no place on Airbnb and we want to work with councils to remove social housing. However, the current situation is complex and costly, and requires a court order to avoid breaking GDPR rules.”