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A huge increase in right-to-buy council house fraud has been detected in London after the Government made it easier for tenants to buy their own home.

Investigators today revealed they uncovered 300 cases last year involving properties worth more than £26 million – more than double the number detected in the previous year.

In addition, about 1,000 tenants were caught attempting to cash in on the “relentless increases” in the capital’s property market by illegally sub-letting their council home. These tenants were among more than 1,600 people who lost their council homes because of fraud.

The first Protecting the Public Purse report, published today, sounded the alarm at the number of migrants who are not entitled to taxpayer-funded benefits or housing but are making false claims.

This is said to “constitute one of the most significant types of fraud detected by London boroughs” – and is likely to increase significantly as investigators target the area.

They migrants are classed as NRPF – having “no recourse to public funds” – but often use children who are not their own to pretend to be a family in need. A total of 432 cases were detected with a value in excess of £7 million.

NRPF families are entitled to seek assistance, housing and subsistence from their local authority while awaiting or appealing a Home Office decision on their status.

Because this is done locally, it has created the potential for “multiple claims at different councils using the same alleged ‘family’,” the report said.

The cost to taxpayers of supporting one NRPF family is estimated at £25,000 a year. Some boroughs have reported having more than 400 genuine cases.

The right-to-buy qualifying rules were relaxed in 2012, with buyers also offered a bigger discount on the market value – currently up to £103,900 in the capital. This encouraged more tenants to buy their own home.

At least three per cent of right-to-buy applications in London are now thought to be fraudulent, the report said.

Across the 33 boroughs, the value of fraud in 2014/15 rose by 46 per cent on the previous year, from £49.9 million to £73 million, even though there were 2,000 fewer cases detected.

This was because investigators targeted “corporate” fraud such as right-to-buy rather than housing benefit and council tax fraud. The 19,513 cases amounted in value to the largest amount of fraud detected in the last 25 years.

A total of 1,078 cases of disabled parking “blue badge” fraud were detected, worth £514,568.

David Kirk, chairman of the Fraud Advisory Panel, said “very significant” Government spending cuts meant that London boroughs were required to do “more with less”.

He said: “Reducing fraud is one way in which local authorities can make real savings, protect taxpayers’ money and local services and help those who are genuinely in need.”