Hundreds of devious tenants who sublet their council homes could now face two years in prison under new laws.

An estimated 500 people in Islington rent out council properties they do not need while thousands of families are stuck in overcrowded homes amid the borough’s sever housing crisis.

In the past, the guilty tenants could only be evicted - but the new prevention of social housing fraud act, which came in this month, makes sub-letting social housing a criminal offence and gives town hall’s the power take back any cash made from the unscrupulous practice.

Cllr Terry Stacy, Islington Lib Dems housing spokesman, said: “We have a housing crisis in Islington with the housing waiting list soaring to 19,000 people since 2010. It is wrong that a minority of tenants try to make a profit out of this housing misery by letting out their homes.

“These tenancy cheats are denying homes to people in desperate need and up to now they have faced little more than a slap on the wrist if they got caught.

“These new powers introduced by the Government will ensure social tenants found sub-letting their home will face the real threat of prison and a fine.”

An investigation by the Gazette earlier this year revealed 350 people have been evicted for subletting Islington Council properties since 2010.

The town hall estimates that 2 per cent of its 25,000 homes are unlawfully occupied or sublet.