Fraudsters infiltrate housing associations

Accountancy firm, BDO Stoy Hayward, has revealed the extent to which criminals are targeting housing associations in scams that are costing the sector up to £400 million a year.

BDO head of fraud services, Simon Bevan, believes that fraudsters are attracted to social landlords because they make easier prey than the banks.

Last year the firm was instructed in four investigations relating to housing associations and this year the figure has risen to eight already.

Fraud in the sector frequently involves the inflation of the price 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 grants, the ultimate victim of the crime is the taxpayer.

Local Authorities have been gradually withdrawing 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 increased substantially and BDO is warning the sector, that as access to funds increases, so will fraud.

The practice of overvaluing land on commercial property developments is well known but the credit crisis has meant that banks are wary and have scaled down lending for commercial property ventures.

As a result, criminals are jumping ship and infiltrating housing associations.

According to Mr Bevan some valuers, consultants and agents employed by housing associations are joining forces with fraudulent vendors and some housing association staff are being bribed into colluding with the fraud.

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