Fraudsters Penetrate Housing Associations
28 August, 2008
According to the Accountancy firm BDO Stoy Hayward, the extent to which criminals are targeting housing associations in cheating tricks are costing the sector up to £400 million a year.
BDO head of fraud services, Simon Bevan, believes that fraudsters are fascinated to social landlords because they make easier prey than the banks.
Last year the firm was commanded in four investigations relating to housing associations and this year the figure has increased to eight already.
Scams in the sector frequently involve the rise in prices of land or homes being purchased by the association. A typical overvaluation would be in the region of 20%. As housing associations are funded by government donations, the taxpayer is ultimately wounded by the crime.
Local Authorities have been steadily moving back from the social housing sector and housing associations across the UK now provide homes for 2.5 million tenants.
The budget for the current financial year has risen substantially and BDO is warning the sector that as access to funds gains, so will fraud. The practice of overvaluing land on commercial property developments is recognized but the financial crunch has meant that banks are under pressure and have scaled down lending for commercial property ventures.
As a result, criminals are increasing and penetrating housing associations.
According to Mr Bevan some valuers, consultants and agents employed by housing associations are joining forces with fraudulent traders and some housing association staff are being bribed into plotting with the fraud.