Written evidence submitted by Social Housing Action Campaign [RSH 030]

Introduction

We address our comments to our experience representing housing association tenants and residents.

The very first paragraph in the Call for Evidence document states that:

“The Social Housing Green Paper published today offers a new deal for social housing … A robust regulatory framework is essential to this by ensuring that existing homes are safe, of good quality, and that landlords deliver the right services. It is also crucial in attracting investment to build new social housing so that hardworking people and our more vulnerable citizens have access to safe, decent and affordable homes.”

SHAC believes that housing associations are too often failing to provide safe, of good quality housing, and appropriate services to their tenants and residents, and despite all the public funds poured into them, are failing to guarantee access to safe, decent affordable homes in sufficient numbers to those who need them.

However, SHAC does not believe that changing the Regulatory Framework alone can achieve these aims, no matter how carefully drawn any new regulatory framework. The Regulator is only one part of the picture. In order to address the current the failings in the system, government would have to enact widespread structural changes to funding streams, and to statutory bodies such as the RSH, and Housing Ombudsman, and make changes to the legal protections for tenants and residents.

Primarily, our submission addresses the following questions from the Call for Evidence:

Below, we present our arguments to explain how effective regulation is being hindered. Evidence in relation to service charges is provided at Appendix I.

 

SHAC Statement on the Regulation of Social Housing

  1. Government relies on housing associations for the delivery of new housing supply. This shapes the sector and influences the Regulator’s decisions on housing association gradings:
    1. Government relies on HAs as a key partner in the delivery of public housing, and uses them to attract private equity funding to supplement government grant to build new homes. This model is preferred to one in which public housing is funded wholly through the public purse, and construction is delivered by councils and publicly owned companies.
    2. This means that HAs must keep city investors happy, and must make this a priority over and above almost all other interests.
    3. The commercialisation inherent in this model drives mergers between smaller and less financially secure HAs to form ever-larger organisations, and the increasing size of HAs creates a number of problems.
    4. Some HAs are now too big to fail. One of the roles of the Regulator is to find ‘rescue’ organisations when HAs are failing. This is less problematic when the association needing to be rescued is small, but is almost impossible when it is the size of Clarion, Places for People, or the newly merged One Housing Group / Riverside for example.
    5. The main regulatory sanction is a downgrade in the association’s ratings. This is not a direct form of action, but rather, an indirect mechanism for applying pressure. A downgrade warns investors that there is a problem with the HA’s governance or financial viability. These investors then apply pressure on the HA to address the problem.
    6. The threat to any HA which does not address the problem is that investor confidence will weaken, and the debt they rely on could be called in or re-priced at a higher rate to reflect the increased risk.
    7. This system creates a paradox however because the downgrade itself could trigger a catastrophic drop in investor confidence. If the association is small, this is resolved by securing a rescue organisation into which the failing HA will amalgamate, restoring investor confidence. As stated at (a) above, this cannot be done with the largest associations.
    8. The Regulator is therefore reluctant to apply this pressure on the larger associations. This has been evident in too many cases to enumerate. But a recent example was the regulatory review of Clarion Housing Group where, despite the evidence exposed in the media, and the public acknowledgement by the leadership of the organisation’s failures, Clarion was given a top governance rating by the Regulator.
    9. Although the government’s housing regulatory and investment arms have been separated once again into the RSH from Homes England, both are nonetheless answerable to LUHC. The Regulator is aware that the HAs being regulated are the same organisations that government needs in order to deliver the Affordable Homes Programme and other Homes England funding.
    10. Despite applying theoretical ‘Chinese walls’ between the two delivery arms, this knowledge continues to influence the Regulator’s decisions. The Clarion finding referred to at 3(e) above was made just days before government announced that the same landlord was to receive £249.7 million through AHP. Had the Regulator decided to downgrade Clarion in the preceding days, it would have caused severe embarrassment to government.

 

  1. Government’s fear of the reclassification of housing associations as public sector organisations constrains the extent to which it is willing to regulate housing associations:
    1. The Call for Evidence document itself makes this clear when it states that

“… we are also clear that we will not introduce measures that risk the reclassification of private registered providers as public sector organisations.” (p9).

    1. One of the reasons for government not wanting associations to be classified as public sector organisations it does not want HA debt to become part of the national debt.
    2. When the National Audit Office determined that HAs should be classified as private sector bodies, one of the consequences was that HAs then fell outside the remit of the Freedom of Information Act (FoIA).
    3. FoIA acknowledges that information asymmetry prevents the users of public services from holding organisations to account. It therefore provides a mechanism through which this is addressed.
    4. Exclusion from FoIA makes it extremely difficult for anyone wanting to scrutinise the activity of associations to do so effectively. This is not just a hindrance for tenants and residents, but for politicians and tenant representative organisations too.
    5. This means that those who know that HAs are acting contrary to the interests of tenants and residents cannot get the evidence they would need to either challenge their behaviour by reporting it to the Regulator or other statutory body, or provide evidence to rebut the claims made by their landlord when they make misrepresentations to the Regulator or other statutory body.
    6. We receive a large number of complaints from our members about the fact that their landlord has refused, or ignored a request, for information. This can include documents as important as a fire risk assessment (FRA) for their building. This is the case even when these assessments are used to justify extreme disruption to the lives of tenants and residents, for example decanting them permanently from their home. Without access to the FRAs, they cannot assess whether there is genuine justification for the landlord’s action.
    7. SHAC also has extensive evidence of housing associations lying to the Regulator and to MPs about their activities. The Regulator’s remit requires only that they ask the HA for assurances about their behaviour, not that they evidence the veracity of the HA’s statements (except to some extent where it concerns financial viability). The mistruths are therefore difficult to challenge both for the tenant and the Regulator.

 

  1. The collective power of HAs means that they are shape the legislation that governs them, including that of the Regulatory Framework. This helps them to reduce scrutiny and accountability to a negligible level:
    1. HAs have used their power over government recently to achieve a major weakening of checks on their behaviour, including by arguing for a weakening of the Regulator’s framework over the years. The weakening has been considerable, and resulted primarily from the lobbying of HAs.
    2. Twenty years ago, in the days of the Housing Corporation, the Regulator evaluated five areas of operation: governance, financial viability, management, development and tenant engagement. Now, only the first two remain, and governance is only assessed in as far as it impacts financial viability.
    3. Up until 2011, HAs were subject to an inspection regime similar to Ofsted in the education sector. Originally this was also housed within the Housing Corporation until briefly being moved to the Audit Commission, which was then closed by government.
    4. The housing inspection regime complemented the work of the regulation teams, providing a means for triangulating data, meaning that decisions were based on more robust data. Now, the Regulator relies almost entirely on the word of HA executives for its assurances, with minimal triangulation against other forms of evidence.
    5. Over the last twenty years, the Regulatory approach has changed from an evidence-based ‘lead regulation’ model, to the co-regulatory (or more accurately self-regulatory) model we have now.
    6. The was again intended to reduce the risk of HAs being classified as public bodies, and government has already precluded any actions that might revive this risk. But it is not just government fear that has led to this state of affairs. The influence of the HA executives over government should not be under-estimated. This was underscored recently with an example from Riverside.
    7. Riverside Housing Group papers leaked to SHAC show that in February 2021, senior executives in Riverside discussed a worrying trend: a sharp rise in the number of tenants and residents taking the landlord to court over disrepairs and uninhabitable homes. Claims were averaging around 29 claims per month, an increase of over 30% since November 2018.
    8. The majority of claims against Riverside were settled out of court. This suggests in fact that the tenants and residents involved had genuine cause to complain about disrepairs and that they had not been able to get them addressed through the landlord’s complaints systems.
    9. In Riverside’s narrative, the big problem was not the unacceptable conditions of its homes, but that continuing to settle tenant’s claims would involve a projected cost of around £3.35 million (working out at £11,000 per claim, including compensation). The executives argued that this was unsustainable.
    10. It was with this mindset that the Riverside executive chose to form a club with other housing associations in a united front against their own tenants and residents, even though they admit that:

“[The] legislation is designed to protect tenants from irresponsible landlords and unsafe living conditions … Any action to limit their right to hold their landlords to account, could be considered as disadvantaging social housing tenants … it could be seen that [housing associations] are looking to avoid their responsibility to their tenants and allow them to live in unfit homes.”

    1. The HAs involved in Riverside’s project included a large (and growing) number of associations, with a sub-group of eight providers to lead it. The eight are For Housing, Onward, Prima, Regenda, Riverside, Salix Homes, Shepherds Bush Housing Group, and Torus.
    2. The group’s stated aim was to identify

“the legislative and policy changes we might seek to reduce the capacity of tenants to pursue inappropriate claims”.

    1. The courts already dismiss inappropriate claims, therefore the use of this word is superfluous. The aim of Riverside and its collaborators is to make it harder for tenants and residents to get justice through the courts in relation to disrepairs.
    2. We understand that government intends to introduce a cap on disrepairs compensation next year, and therefore believe that this project has borne fruit for its architects.
    3. Like the Regulator and Ombudsman, the First Tier Tribunal is one of the mechanisms intended as a check on landlord’s behaviour.

 

Additional Comments

  1. The current legislative infrastructure for social housing fails to provide adequate accountability for, scrutiny of, and enforcements against housing associations in breach of their duties towards disabled tenants under the Equality Act 2010.
    1. Poor landlord behaviour has a significant impact on all tenants but disabled tenants, in particular, are substantially disadvantaged by such conduct. The effect of this is far-reaching, devastating the quality of disabled tenants’ lives (and of the carers residing with them) physically, mentally, emotionally, and relationally.
    2. The current legislative infrastructure requires social landlords to publish policies regarding its commitment to adhere to the Equality Act 2010 but there is no mechanism to scrutinise and enforce adherence. The onus is therefore entirely on the tenant to pursue the landlord for breaches through the complaints process.
    3. For those preoccupied with the challenges of disability, this process is draining and especially demoralising when met by landlords who intentionally protract the process or completely ignore their complaints. An additional issue is that the complaints process itself is not always accessible depending on the tenant’s disability, and landlords often refuse to make reasonable adjustments to facilitate this.
    4. Upon an unsatisfactory response following the landlord’s complaints process, after at least 8 weeks tenants have the option of pursuing complaints with the Housing Ombudsman (HO). This process is exceedingly lengthy, sometimes taking around a year, leaving disabled tenants to languish in difficult circumstances.
    5. While the HO has the power to fine landlords it considers to be in breach of its duties, these fines are usually far too minimal to have an impact on landlord behaviour overall. The HO’s role is also reactive, providing no scrutiny until problems are raised, and the HO is powerless to proactively enforce landlord behavioural change in the long-term.
    6. The current role of the Regulator of Social Housing is even more flaccid and redundant. For example, in 2021 the Regulator was presented with comprehensive evidence in the form of HO findings, medical reports, disability media reportage, and extensive social media complaints of Southern Housing Group’s failure to either acknowledge or fulfil its disabled tenants’ requests for repairs and adaptations (and other reasonable adjustments), or to provide appropriate intervention and protections for those experiencing severe antisocial behaviour (ASB).
    7. Nevertheless, the Regulator refused to investigate Southern Housing Group on the basis that there was supposedly no evidence of ‘serious detriment’ being suffered by tenants.
    8. The Regulator failed to explain how the ‘serious detriment’ criteria was not met despite the evidence presented, failed to explain how it arrived at this conclusion in the absence of an investigation, and failed to indicate whether it had adjusted its criteria to consider the substantial disadvantage experienced by disabled tenants as defined in the Equality Act 2010.
    9. While the upcoming legislative changes promise to remove the Regulator’s ‘serious detriment’ criteria, there remains no definitive promise to proactively scrutinise landlord compliance to the Equality Act 2010 regarding disability, or to execute specific penalties to landlords who fail to comply to their duty of care to disabled tenants.
    10. Without such protections for disabled tenants, the role of the Regulator will remain wholly ineffective for those suffering substantial disadvantage at the hands of their landlords.
    11. While extensive research has long identified insufficient provision of accessible social homes and safe, appropriate living conditions, little has been done to enforce landlord response. These problems are avoidable given the excessive financial reserves they have accumulated, which could be readily apportioned towards resolving these issues. In the absence of a clear legislative requirement to do this, only the threat of or actual media exposure appears to motivate landlord response.
    12. Such was the case for severely-disabled Junior Jimoh, who lived in deplorably squalid conditions for years until transferred by L&Q housing after being featured on ITV. Meanwhile, millions of disabled tenants who do not enjoy the benefit of such exposure are left to suffer.
    13. Current landlord policies often promise to employ a multiagency approach when supporting disabled tenants. However, as landlords are often brazenly nonadherent to their own policies, their engagement with external agents frequently fails to materialise. The outcome of this can be tragic, particularly in the area of ASB, as in the example of high-profile cases as follows:
      1. Fiona Pilkington killed herself and her disabled daughter Francecca in 2007 after Leicestershire council failed to intervene appropriately following relentless ASB from neighbours.
      2. Three years later, David Askew, who had learning difficulties, was found dead of a heart attack outside of his home after suffering harassment from neighbours for a decade; his landlord was Peak Valley Housing Association. Though he died of natural causes, medical professionals involved at the time believed his death was related to the ASB.
      3. In 2018, Mark Smith, who had learning difficulties, was murdered after thugs overran his home in Chingford; his housing association had repeatedly refused to change the locks on his door to stop perpetrators from frequently invading his home.
      4. In 2021, despite pleas from both Sir Iain Duncan Smith and the local Safer Neighbourhood Police, Southern Housing Group refused to rehouse a Chingford family, which includes two disabled tenants, who had been subjected to violence and harassment from their immediate neighbours for five years.
      5. In all above incidents, multiagency failure was an issue. However, if landlords are mandated to fulfil their duty of care to disabled tenants and legally required to exercise appropriate use of their powers under the Anti-Social Behaviour, Crime and Policing Act 2014 on behalf of disabled tenants, events such as the above would be far less likely to occur.
    14. Over the last year, SHAC has become increasingly aware of landlords who take a punitive approach to disabled tenants with legitimate complaints. This can take the form of punishing disabled tenants by ignoring their repair requests or taking a long time to complete them, blaming them for their living conditions or falsely accusing them of ASB when they are in fact the victim.
    15. This bullying and harassing behaviour has continued unchecked for years because landlords know that the current legislative infrastructure provides no inspection to prevent or penalise such activities. Many disabled people do not have the practical or financial resources to pursue their complaints through the legal system, which itself often fails to recognise the seriousness of such complaints when presented judicially.
    16. If the government is serious about social housing reform it cannot disregard the needs of disabled tenants who are at particular risk when subjected to poor landlord conduct. It is our strong view that the government has a moral and practical duty to ensure landlord compliance to the Equality Act 2010, specifically protecting disabled tenants in social housing regulation.
    17. Future regulation must provide clear accountability for landlords in how they engage and respond to their disabled tenants, and enforcements when they fail to do so effectively, while also providing disabled tenants with ready access to remedy when breaches occur.

 

  1. Service charges need to be regulated.
    1. SHAC has long received frequent and sometimes shocking reports about problems with service charges. Some landlords are clearly worse than others. However, across the sector it is evident that tenants and residents are getting a raw deal. HAs do not appear to have either the ability or the will to manage this aspect of their business responsibly.

 

    1. HAs collected £1.5 billion in service charge income last year. They claim to have spent more than this on the services delivered, but a body of evidence provided to SHAC by our members demonstrates that HAs do not have accurate systems for tracking the services delivered, nor for billing.

 

    1. There is a substantial cost to the public purse involved. Many HA tenants and residents pay their service charge wholly or partly through Universal Credit (UC). There is however no system in place by the Department for Work and Pensions to scrutinise the legitimacy of service charge billing by landlords.

 

    1. Tenants and residents who pay their own service charges are reluctant but willing to spend the time required to analyse the cost of services, identifying errors, and then attempt to get refunds. No-one is scrutinising the legitimacy of the service charges paid through the benefits system.

 

    1. SHAC compiled a report on the abuse of the service charging mechanism by housing associations. This is attached as Appendix I, but in summary we found:

 

      1. Double or sometimes multiple charging for a service.
      2. Charges for services never delivered.

 

      1. Charges for services that would be impossible to deliver, for example lift maintenance in homes without lifts.

 

      1. Charges for services that were in fact being provided by the local council, for example refuse collection.

 

      1. Unexplained charges, in that even the landlord when pressed could not explain what the charge was for.

 

      1. Difficulties getting itemised bills for services and supplier receipts, even where the law required the landlord to produce them; and the law does not give every type of tenant the legal right to inspect invoices and receipts.

 

      1. Difficulties getting the landlord to engage with tenants and residents attempting to highlight overcharging (the incidents of undercharging far outweigh undercharging). Tenants lodge a call with the helpline and are promised that someone from the finance department will return their call, but the promised call does not happen, and when they call back, are told that there is no record of the original call. This is then repeated. We believe this is deliberate. When tenants call the alternative number in order to pay their rent, it is answered and dealt with immediately.

 

      1. Even where a landlord admits an error and promises to refund, there is no set timescale, and refunds sometimes take years to apply, or never appear at all, even when ordered by the Ombudsman or FTT.

 

      1. There is no regulation of the mark-up that is acceptable where service provision is sub-contracted. The worst example provided to SHAC with evidence was a mark-up of over 2000% (this arrived after publication of the Service Charge Abuse report so is not included).

 

In Conclusion

SHAC supports the idea that of the provision of safe, of good quality housing, and appropriate services to tenants and residents across all tenures, and access to safe, decent affordable homes in sufficient numbers for those who need them.

We believe that if government genuinely wishes to meet these aims, it needs to carry out widespread reform to the UK housing model because it cannot be achieved just by tweaking one element – in this case the Regulator.

 

SHAC Response to the Review of Social Housing Regulation
Appendix I: Report on Housing Association Service Charge Abuse

shac-report-on-the-abuse-of-the-service-charge-system-by-ha-landlords-final2.pdf (wordpress.com)

 

December 2021