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housing benefit: how is this allowed

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Hi
I know someone in a one bed council flat who has two of her friends living there as lodgers. They both sleep in the living room. Her tenancy states that no more than 2 people can stay live in the property. The rent on the flat is 330 pm.
Both her friends are claiming housing benefit of 75 pounds per week- 600 pounds a month. The council suspended the housing benefit to do a fraud investigation, however they have now reinstated the claim and are continuing to pay the housing benefit. Surely somthings not right?

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