Council flats are like "government subsidized living". Letting it out (aka renting it out), is taking money from the government, intended to help you shelter your family, and using it to turn a profit.

A council flat is an apartment rented as part of a socialized housing scheme to low-income households. Usually the rent is much much much lower than renting on the free housing market. Sub-letting is usually explicitly forbidden when you are part of one of these schemes.

A "council flat" would be an apartment which is owned by the local government. The person who the council thought was living there was essentially sub-leasing it to people through Airbnb which is against the lease rules.

People have mentioned public housing, but it's probably more like renting out an apartment that has rent control (where there's a limit on how much the rent is allowed to increase each year). "Public housing" in the US has a connotation of being blocks of apartments/flats that are all managed by a government entity, where rent controlled units may be almost anywhere.

Could also be like Section 8 housing where I believe the landlord gets part of the rent from the government and part from the tenant (disclaimer: never lived in any of these, I could be wrong on details)

Renting out public housing

Renting public (housing) apartment.

renting a subsidized apartment