Written evidence submitted by St Basils [EXA 008]
This response is provided by St Basils. We are a specialist Housing Association (Registered Provider) and Charity providing accommodation and support for young people, aged 16-25, who are homeless or at risk of homelessness in the West Midlands. We are also commissioned by DLUHC to facilitate national Youth Voice and national Youth Homeless Parliament and have developed the three national strategic Positive Pathway Frameworks including, the generic framework to prevent youth homelessness; the Care Leaver Accommodation and Support Framework in partnership with Barnardo’s and the Youth Justice Accommodation Framework[1]
We are very pleased that the challenges related to non-commissioned exempt supported accommodation is being given a high priority by the Select Committee. We are a commissioned provider of exempt supported housing for vulnerable young people, and we believe we have relevant experience to contribute to the Inquiry.
The quality varies considerably. There are good landlords who use the rent funding to invest in their exempt stock and the housing management service. These landlords will have developed the accommodation in consultation with their Local Authorities and will generally tend to meet lower-level support needs. If they have no commissioned support, potentially because the Local Authority has limited or no support funding, they may fund support from charitable sources or floating support may be provided by other agencies. Intensive housing management is likely to provide a level of oversight and supervision.
There are others, sadly increasing numbers, who see this as a means of generating significant income, far in excess of HMO and LHA rent levels, without the commitment to the application of the rent or indeed eligible service charges, for the purpose intended. The quality of many of these properties is appalling, inhumane and often out of sight.
Where support is commissioned separately and the quality of accommodation meets high standards and is well managed, it does represent value for money as the higher rents reflect higher costs of managing this type of accommodation, including the communal aspects, additional housing management services and higher turnover as residents progress and move on.
The current model is only financially viable if the support is funded separately and there is oversight and regulation to ensure that the rents and property charges are used to provide good quality accommodation.
However, we are seeing significant growth of a model of non-commissioned exempt accommodation where the higher rents are not used to maintain high quality accommodation and where some of the most vulnerable residents are accommodated in some of the poorest housing, with little or no support, trapped in unemployment - all paid for by central government. Nationally, FOI information published by Crisis in October 2021 shows that 153,701 households in Great Britain were housed in exempt accommodation as of May 2021. This represents a 62% increase from 2016 to 2021[2]
Value for money and financially viable raises a number of questions, including for whom?
As a provider of exempt supported accommodation, we tailor our rents and service charges to agreed levels with the social housing regulator and our Local Authorities and ensure we provide high quality accommodation, mainly self-contained with additional communal facilities. Service charges must relate to actual costs.
Margins in supported accommodation are small, even when support is separately commissioned. Our margins are less than 3% and that includes charitable contributions to our services. Funding for support is generally fixed for a contractual period with no annual inflationary increases and at far lower levels than during the Supporting People programme from 2001-2009.
The financial model for exempt supported accommodation no longer stacks up for most landlords. However, we are also aware of extremely poor-quality exempt accommodation where there is no commissioned support, in fact little evidence of any support, and we can only deduce that the rental income must presumably be used for some other purpose.
Rents in exempt supported accommodation are generally much higher than other types of tenancy. If this is part of a progression model where support is provided to assist the tenant to overcome barriers and move on in a planned positive way to greater independence, it is worth it. If it is not and traps the tenant in poor quality accommodation, with little or no support and disincentivises work, then it is not financially viable for them.
Rent cannot fund support, even minimal support, as required by the current housing benefit regulations. If there is no commissioned support, it begs the question, where is that being funded from? Evidence indicates that in some cases it is being charged to tenants as an ineligible charge to be paid from their Universal Credit living allowance. Clearly this has implications for affordability for tenants. In some cases where support is minimal or not provided, these charges are not always collected. The landlord may be making sufficient return through the exempt rents and has evidenced that a charge for support is being made.
As there are no outcomes required by commissioners in non-commissioned exempt accommodation, there is no expectation of progression or short-term occupation, and therefore tenants can become trapped in high rents and unemployment.
Local Authorities are currently administering government funding for housing benefit with little or no control over supply, quality or oversight of needs being met. Currently the proliferation of the non-commissioned exempt sector who are not consulting with Local Authorities to meet local need, is not good value for money for government.
A report recently published by Prospect Supported Housing, on their decision to close exempt accommodation provision, estimated “that at least £816m has been spent on exempt accommodation in the last financial year alone. This is based on the responses received and a conservative estimate for those who were unable to provide exact figures”. They went on to note: “Spend on exempt accommodation (and presumably demand) has continued to rise. Based on responses from 52 authorities, the spend on exempt accommodation has risen by over £110m between 2018-19 and 2020-21”[3]
The exponential rise in this type of provision is causing considerable concern in the West Midlands. In addition, evidence is growing that the model is becoming increasingly common in many areas of the country as investors and providers see the opportunity and unmet need.
The 5 pilot areas have taken a lead in addressing the issue and provide examples across different regions. Emerging findings from the pilots offer key learning. However, we strongly believe that guidance alone is no longer adequate to address this ever-increasing issue. Investors and potential providers contact us regularly believing that there are opportunities for them. The yield they expect is unrealistic. We are also aware that many Local Authorities and some providers still see this as an HMO issue, and it takes some time to realise what is actually happening. Some Local Authorities are desperate for provision to meet local need and do not have the resources to commission support. Providers and investors can in some cases, ‘talk a good talk’. Some are well-intentioned, some less so. There is no oversight of the skills and capabilities of the providers in the non-commissioned exempt sector.
Unmet need, low LHA levels particularly for single people, inadequate social housing supply and no explicit funding for housing related support since the ring fence was removed from the Supporting People programme in 2009, are combining to encourage the growth of this inadequate and expensive sector. Current regulations rely heavily on outdated housing benefit regulations and make it extremely difficult for Local Authorities to manage the supply and the quality.
It is only a matter of time for this to be widely experienced and acknowledged as a national issue. Government intervention is required to effectively address the challenges related to the exempt accommodation sector. Tackling the nature of this exploitative provision, caused by a combination of root cause issues and inadequate regulations resonates with the government’s levelling up commitment.
This varies from area to area, both in relation to commissioned exempt supported accommodation and non-commissioned. Some commissioned providers are not Registered Providers (RPs), they may be charities or CICs, and some non-commissioned providers are RPs. The benefit of RPs is that the Local Authority will receive 100% subsidy from central government for the Housing Benefit costs. The Regulator of Social Housing should also have regulatory oversight of the provider. Commissioned models enable the Local Authority to inspect and require evidence of quality standards. Non-commissioned models generally have less oversight and greater reliance on the provider.
The particularly problematic non-commissioned model which has grown significantly in Birmingham is where the Head landlord RP has lease-based agreements with multiple private landlords and in some cases, further complexity through managing agents. The assumption might naturally be that the Social Housing regulator will have oversight of this provision. This is not always the case as the RPs do not have to define all of their exempt stock as social housing and the regulator cannot therefore apply the tenancy standards to them.
The key issue is that the Local Authority should have authority and oversight of the provision of exempt supported housing in their area. Currently they are relying on outdated Housing Benefit regulations which do not provide them with the ability to require compliance with standards or quantity.
This will also vary from area to area. As Supporting People legacy funding has diminished, the supply of commissioned supported housing has also hugely shrunk. In some areas, commissioned support meets as little as 15% of local need. Pilot local authorities will be in a better position to provide a response to this question as they have carried out supported housing needs assessments. Our experience is that the non-commissioned sector is growing exponentially in many areas, beyond meeting local need and taking up family homes for multi-occupation, impacting significantly on communities.
How does whether a provider is registered or non-registered, or commissioned or non-commissioned, impact the quality of provision?
The key issue is whether or not the provider has worked with the Local Authority and partners to meet need, ensure quality of provision and be able to fund support. Commissioned exempt accommodation has funding for support, has been through a procurement process, will be monitored and, outcomes, including feedback from residents, will be reviewed. Non-commissioned and unregulated is unlikely to have that level of oversight and Local Authorities are unlikely to have the capacity to provide it, and even if they have, they currently don’t have the powers to enforce it.
Exempt supported accommodation is an invaluable option for people with support needs, who may be in transition or may have longer term needs. It makes a major contribution to prevention, early intervention, and recovery. It underpins integrated social care systems. In 2001 the new way of funding housing related support (Supporting People) recognised the need for a strategic response to identifying and meeting need. However, financial constraints saw the ring fence removed from the funding in 2009 and since then commissioned provision has been very dependent on the funding Local Authorities have managed to hang onto as statutory priorities have increasingly taken precedent.
The pilots have required Local Authorities to carry out a supported housing needs assessment and develop a supported housing strategy. That should underpin the development and provision of exempt accommodation. The Housing Benefit regulations should be updated to clarify what level of support, care or supervision is required. Government needs to address the support funding gap. If it were to, it could re-direct the current spend on non-commissioned poor provision into the provision of good quality supported accommodation which is commissioned to meet need, resulting in better outcomes for our most vulnerable citizens.
Exempt rents and service charges can only meet the housing, management, and eligible charge costs. They cannot cover the costs of support. Funding for support is essential and needs to be resourced by government. There are many good examples of commissioned services where there is high quality provision and excellent outcomes.
Our view is that the regulatory oversight should be given to Local Authorities supported by regulatory governance of RPs via the Regulator for Social Housing. Registered Providers who provide exempt accommodation should identify these units as social housing. Government should review the regulations in relation to Housing Benefit and the definition of support, and planning and licensing regulations should be reviewed to include exempt accommodation.
There are two key aspects to this:
○ Alignment of existing planning and HMO licencing powers to capture supported housing provision to assist in managing supply – currently exempt from licencing, Article 4 etc.
○ Strengthened definitions within current regulations relating to the level of provision of care, support, and supervision and the source of funding of support to be transparent.
Exempt accommodation is a complicated issue and can be difficult to explain. Whilst the public generally understand what a House in Multiple Occupation (HMO) is, they do not see the difference and implications of exempt. It isn’t a question of information, it is a question of action required to address the poor-quality provision, the exploitation of vulnerable people and the poor use of public funds.
We believe this Inquiry offers an opportunity for government to ensure that the current funding for this unacceptable housing provision is used in a constructive and progressive way, enabling some of the most vulnerable to secure good quality accommodation and support, enabling transition to greater independence and employment. A review of the current funding model for locally delivered supported housing is required incorporating funding of support for vulnerable tenants.
January 2022
[1] https://stbasils.org.uk/news/refreshed-positive-pathway-documents-launched/
[2] Over 150,000 households in controversial exempt accommodation | Crisis | Together we will end homelessness; October 2021
[3] Prospect SAFE SUCCESSFUL SUSTAINABLE A shared vision for better homes, support and opportunities, October 2021