It is no good getting mad about it if you are not prepared to do anything about it.
Where this trouble begins is that your sister is not entitled to sub-let the property of which she is the tenant. It is estimated that about one in seven council (or housing association) properties is not occupied by the tenant. The owners of the property (i.e. the council or housing association) decide who has the tenancy, not the tenant.
You do not make it clear what rent her Housing Benefit covers. Since your niece is paying the rent on the council property your sister should be living in I assume you mean she uses her HB to pay the rent in her boyfriend�s place. No doubt he�s claiming HB as well.
Your sister has not only vacated a council property which should be allocated by them to somebody else, but she is receiving HB and tax free rent.
This sort of behaviour is costing taxpayers an absolute fortune and needs to be reined in. You should, as mrs_overall recommends, report your sister to the DSS and the council.
Unfortunately, my advice is not impartial. I pay hefty taxes to support lifestyles such as those enjoyed by your sister and I get extremely annoyed when I hear such tales.