The Prevention of Social Housing Fraud Act 2013 (“the Act”) introduced an ability to obtain an Unlawful Profit Order (“UPO”), which is an order requiring a tenant to pay their landlord any profit they have made from subletting their home.
Seeking an UPO from the Court can be a very simple task and usually has a big impact, deterring tenants from subletting their homes. Below is a handy how to guide to assist with obtaining an UPO.
When can the Court make an UPO?
An UPO can be requested within civil proceedings and can be made in the case of both secure and assured tenancies.
In order to obtain an UPO in the case of a secure tenancy, all of the following conditions must be met:
- in breach of an express or implied term of the tenancy, the tenant has sub-let or parted with possession of;
- the whole of the property, or
- part of the property without the landlord’s written consent
- the tenant has ceased to occupy the property as their only or principal home, and
- the tenant has received money as a result of the conduct described in paragraph (a).
In the case of an assured tenancy, in order to obtain an UPO, all of the following conditions must be met:
- the landlord is a private RP of social housing, a RSL or Community Landlord in Wales
- the tenancy is not a shared ownership lease
- in breach of an express or implied term of the tenancy, a tenant under the tenancy has sub-let or parted with possession of the whole or part of the property
- the tenant has ceased to occupy the property as their only or principal home, and
- the tenant has received money as a result of the conduct described in paragraph (c).
How to request an UPO
The request for an UPO can be made within civil proceedings either within possession proceedings or as a stand-alone money claim.
Where a landlord is seeking possession of a property, the request can simply be made within the pleadings when issuing the claim.
On some occasions, a landlord may wish to seek an UPO where for example, they have already obtained possession of a property. This can be done by issuing a stand-alone money claim, supported by witness evidence.
How to calculate the unlawful profit
The amount payable under an UPO must be such amount as the court considers appropriate, having regard to any evidence and representations made by or on behalf of the landlord or the tenant.
Th maximum amount payable under an UPO is calculated as follows:
Step 1
Determine the total amount the tenant received as a result of subletting or parting with possession of their home (or the best estimate of that amount).
Step 2
Deduct from the amount determined under step 1 the total amount, if any, paid by the tenant as rent to the landlord (including service charges) over the period during which they sublet or parted with possession of their home.
The calculation can be a best estimate and based on evidence received, for example statements from sub-tenants, other individuals or bank statements where money is received electronically.
How to enforce an UPO
Where you have successfully obtained an UPO, you can seek to recover the monies.
A strongly worded letter before action is advised in first instance, with the possibility of setting up a payment plan.
Where the Defendant does not engage, you could consider seeking to recover the monies via the court. Options available may be an attachment of earnings order where the Defendant is in employment, a third party debt order where monies are known to be in a bank account, or a property charging order where the Defendant owns a property.
Top Tips
Having successfully assisted numerous landlords with obtaining UPOs, including those for £78,000, £102,000 and £145,000, my handy top tips are as follows:
- Make use of partnership working-work in partnership with local authorities or fraud investigators to strengthen your evidence of an unlawful profit. Bank statements should be obtained along with other evidence which indicates that the tenant is subletting or has parted with possession of the property. Putting small pieces of evidence together can create a bigger picture to prove your case.
- Don’t sit back once a claim is issued, continue to gather evidence to prove your case. Make a Part 18 Request, requiring the Defendant to answer questions.
- Publicise your wins! It’s important that these results are publicised so that tenants will think twice before unlawfully subletting their homes to make a profit. With a shortage of housing in the UK, homes should be occupied by those in genuine need of housing.
For more information, please contact Victoria Smith.
