If the person is not living there and claiming housing benefit they are probably committing benefit fraud. Is illegal, needs reporting to council I think.
If the house is being illegally sublet to lots of people then this is probably illegal for more than one reason. Overcrowded, not set up properly if enough people to make it an HMO etc. Needs reporting to landlord/council etc. It could be dangerous for the tenants and if e.g. there is a fire the fire service will not be expecting so many people to be there if it is only supposed to be let to one person. They won't just look for the tenant to rescue as there may be visitors staying, but won't be expecting 6 or 8 or more tenants.
If the person is getting a substantial rent from the subletters they might also be conning the tax man as well as the benefits system. And some benefits are taxable so they may owe tax. Needs reporting to the tax man.
If none of these things are happening the house will be looked at, deemed correct and nothing further done. If they are happening then it gives the authorities the chance to do something to rectify the situation.
There could be many things that need reporting I have not mentioned but I would report asap for the safety aspect of things. If it is overcrowded it could be that people have many appliances of their own in a small bedroom. Own tv, fridge freezer, toaster, kettle, microwave, hot plate, DVD player, games console, toaster maker, etc. Most single rooms are not set up electricity wise to provide enough power for all these items and more, therefore overloaded extensions are used and there is a greater risk of fire because of too much electricity being drawn. Also, if there are cooking facilities put into other rooms there is a bigger chance of accidents happening than in a standard kitchen setup so a greater risk of fire. This will affect the tenants (and possibly their families) , the owner and any adjoining neighbours etc.
There are more reasons than just the possible benefit fraud to report it, and as I said earlier, if nothing is wrong then it won't be taken further, if there are problems you could be saving benefit/council departments money and helping safeguard people who might be living in dangerous situations.