Written evidence submitted by Preston City Council [EXA 034]

In particular, the inquiry seeks information on the following points:

What is the quality of exempt housing provision?

In our experience in Preston, quality is very variable and needs to reflect three criteria. 1. The physical quality of accommodation varies depending on the supplier. Long established suppliers with good experience generally provide good quality properties which are well managed. Newer suppliers, however, often purchase older properties, converting them at the minimum cost and often with minimal space standards and then fail to robustly manage, in many cases, challenging tenants who can often cause damage and lead to declining property conditions. This leads to complaints about the properties and a need for the Council to intervene and establish what, if any, action against the operators is necessary, which inevitably places a burden on the Council to act.

2. Quality also needs to encompass location, with regard to the density, proximity and co-location of properties housing multiple tenants, often from difficult backgrounds and with complex needs, in primarily residential areas. In some cases, several properties on the same street have been converted into such accommodation, where tenants interact with local residents in a negative way, and anti-social behaviour can ensue. In addition, having exempt properties very close together, with no opportunity for the local authority to apply limits on numbers or controls on location, means there’s more opportunity for vulnerable residents from one house to be adversely influenced by residents from another setting.  It has been our experience that where there is a population of people with support needs this in itself attracts the unwanted attention of drug dealers and others who will exploit the vulnerabilities of residents for criminal purposes. There is an awareness of the presence of these criminally minded individuals seeking to exploit vulnerabilities which increases the crime and fear of crime in a neighbourhood. Complaints about properties housing people with support needs are driven by this fear of increasing criminality and criminal acts themselves, including serious offences resulting from activities of organised crime gang associates.

A high proportion of the anti-social behaviour experienced and reported has been aggressive and persistent in nature and has affected not only immediate neighbours but the wider population in a locality. The anti-social behaviour is often noted as having resulted from consumption of alcohol or other substances which has adversely affect the behaviour of a person towards others.

Aggressive begging in the vicinity of local retail businesses is reported to have deterred customers and had a negative on the local supply of goods and services, particularly where the local shops are also experiencing shoplifting of basic commodities. Anti-social behaviour has occurred in public places without apparent consideration of the impact upon others and includes street drinking and taking of drugs, littering, urinating and in some cases fighting and other aggressive acts amongst groups of people congregating in public.

The individuals who have the greatest impact in terms of their anti-social are those visiting an area most days and their activity becomes a social normality. The anti-social behaviour has escalated to such an extent in some neighbourhoods in Preston that it requires considerable intervention by authorities and local volunteers to try to maintain the locality in a state where it can used by the remaining population. One ward in Preston has seen a particularly significant increase in the number of properties providing exempt accommodation. Some early analysis of the data from this ward suggests a corresponding increase of over 50% in reported ASB since these properties were set up. Further analysis is ongoing’

3. Of greatest concern in Preston, however, is the quality of the support provided to tenants by many of the newer suppliers. In the absence of any prescribed and enforceable standards in this regard, many operators provide minimal support to those in greatest need, far below what is required to maintain good property conditions and minimise negative impacts on neighbourhoods. The experience in Preston is that this aspect potentially causes the greatest amount of ASB and complaints to services and is a significant burden on the already stretched resources of local authorities and the Police. (See point 2 above)

Vulnerable tenants often find themselves sharing with other vulnerable tenants who will take advantage of them which can lead to loss of accommodation and an impact on rough sleeping and homeless presentations, increasing costs further to the public purse not just around homelessness but health, presentations at A&E, Police involvement etc. Accommodation of this type works best when groups of tenants form stable relationships within a property, but without adequate support and encouragement from the providers, and often with transient occupancy, this is considerably more difficult and inevitably contributes to the difficulties described above.

Is the current model of exempt accommodation financially viable, and does it represent value for money?

For many new suppliers the current model is hugely financially lucrative and generates significant profits for minimal outlay. It is not an over estimation to describe the recent massive uplift in this type of accommodation provision as a ‘licence to print money’. In the long term this cannot be sustained by local authorities, struggling to respond to the inevitable surge in complaints from neighbours and some tenants, alongside the increasing Housing Benefit payments to provide the enhanced payments. We do not consider the current model to be financially viable. Due to the way subsidy payments are recovered, local authorities often have to fund a substantial percentage of cost if the provider is not a registered provider, many of these companies are a mixture of charities, non-profit making or Community Interest Companies (CIC). In real terms this costs local authorities and the local community financially, capacity of services is stretched which can lead to cuts to services and job losses. With few powers to address these issues providers continue to expand in a very lucrative market.

Crucially, the current model whereby this type of accommodation attracts significantly higher rates of Housing Benefit, with minimal controls on the quality of provision, is attracting operators with no experience or capacity to properly manage and control the accommodation. This loophole urgently needs to be closed by a change in legislation as it is skewing the provision of much needed accommodation of this type in some areas towards inexperienced and irresponsible providers.

For example, based on a typical 4 bed house of exempt accommodation with a rent charged at £250 per week per room. The rent officer would probably determine the value to be £80 per week per room, this equates to an additional Housing Benefit cost to Preston City Council of £170 per week per room. Over a 12-month period, based on full occupancy, this one property alone would cost the local authority an additional £35,360 per year. If we multiply this by an increase in provision, we estimate the Council could be required to fund an additional £1m of benefit payments per annum.

The shared housing model often used by these new providers gives little regard for matching vulnerable tenants, often with complex needs around substance misuse, mental health and offending. What is required is greater access for under 35s to access self-contained accommodation with a floating support service, both of which would cost significantly less than the current model but would need the Local Housing Authority to commission it, overseeing good practice and value for money.

Are there significant geographical and regional differences in the provision and the problems of exempt accommodation?

No, the same problems and issues appear to be common and are affecting areas across the country. What does appear to have been happening more recently, however, is that providers, having saturated the most major urban areas and large cities, are now moving into other areas, especially in the North of England where property prices are relatively cheaper. In Preston there is a surplus of either large ex-student HMOs available to buy, or ex local authority properties now privately owned and available at low prices to convert. These properties are particularly attractive to the operators of exempt accommodation and have seen a huge increase in numbers in recent years.

Since the start of the pandemic, we have seen several providers establish these properties in Preston which equates to an extra 54 properties or in excess of 170 bed spaces. The majority of these are with one provider who we specifically told we did not require any more of this type of housing especially as they saturated the market in a small ward of the City with 4 or 5 properties on the same street of back-to-back terrace properties. In May 2021 a new provider made enquiries about properties in Preston and was again told we did not require this provision, but they completely ignored the strategic approach we are trying to take and are just in the process of opening 3 properties of supported shared housing which equates to another 51 bed spaces. This latest provider is a CIC so will cost PCC a significant amount in lost subsidy.

What is the proportion of exempt accommodation that is provided by registered compared to non-registered providers, and is an appropriate balance being struck?

Most accommodation is provided by RP’s or providers linked to RP’s?

The majority of providers are registered and provide quality accommodation and support which ranges from sheltered housing through to specialist mental health, learning disability and domestic abuse, and homelessness accommodation etc but over the last 2 years we have seen a significant increase in provision by both registered and non-registered providers, establishing provision for homelessness with little understanding of the requirements, placing chaotic and complex people together who are vulnerable and require a different approach, which local authorities like Preston City Council are trying to address in a strategic way with partners which will offer better value for money and the right accommodation with the right support. See previous response which gives an indication of the increase we have seen since April 2020.

What is the proportion of exempt accommodation provided by commissioned compared to non-commissioned providers, and is an appropriate balance being struck? 

Since the ending of Supporting People, we have seen a reduction in commissioned provision and as stated previously even when specifically informed not to establish a provision they ignore the strategic approach. With a commissioned, strategic role and powers given to local authorities then we could ensure good quality provision. However, for 2 tier authorities like Preston consideration needs to be given to the statutory roles and ensure the upper tier, Lancashire County Council in this case, work with the District Councils with the housing and homelessness statutory duty to avoid issues with non-registered providers. It needs to be recognised that the District Councils have the statutory, strategic and professional knowledge to commission and manage provision of much needed good quality supported housing.

How does whether a provider is registered or non-registered, or commissioned or non-commissioned, impact the quality of provision?

Commissioned services are generally more established and provided by experienced organisations so in our experience the quality is better. However, the situation is made more complex where there is a mix of registered/nonregistered and commissioned/non-commissioned providers in areas where there are several local authorities in proximity or indeed the two-tier local government system exists. This leads to a mix of providers, commissioners and property types and difficulties in the governance and monitoring of standards and interventions.

How should exempt accommodation be provided and what should the service cost?

In our view, the provision of this accommodation needs to be locally controlled in order to meet local needs. It needs local authority governance and oversight, with the ability to allow local authorities to properly check the due diligence of proposed operators against pre-determined criteria. The Government should ideally set basic minimum standards for this accommodation nationally but give local authorities the ability to set additional local conditions to reflect not only the need for this type of accommodation but also the numbers and locations of such properties. As a result, the costs will vary and will need to be flexible, but we reiterate our view that the Housing Benefit rules MUST change to remove the current incentive for poor operators to set up as providers and make huge profits from the public purse.

How should the regulatory oversight of exempt accommodation be organised?

See above, basic minimum standards set by Government then local authorities having the power to set additional conditions, impose limits on the number and type of such accommodation, proximity to other properties, etc. Also, local authorities need the power to revoke permissions from operators if they do not robustly manage the properties under their control and support the tenants in an appropriate way.

What should be the regulations governing exempt accommodation and how should those regulations be enforced?

See above

Is there sufficient publicly available information about exempt accommodation?

No

Any other relevant information

One of the difficulties encountered in Preston is the fact that the Planning system at present does not apply to many properties being brought in to use as exempt accommodation. It is suggested that the planning system be amended to introduce a separate use class for exempt accommodation, that would require all such properties to need planning permission to operate. Whilst this would introduce an additional element of control, not all considerations related to exempt accommodation can take place in the context of a planning application, because planning is concerned primarily with the use of land and the effect on amenity of an alteration or change to the use of land. Planning is not intended to deal with poor accommodation, ineffective landlords/operators, antisocial behaviour by occupants, etc, hence additional controls would still need to be in place as described above. There is no merit in controlling one without the other.  

The continued development of this form of accommodation is also having a detrimental impact on the provision of accommodation for homeless families, especially those requiring 4 or more bedrooms. Private sector landlords are leasing these larger properties to these providers as it is more profitable to rent out per room than to one family. Private sector landlords are also increasingly selling larger properties as they struggle still to understand the housing element of Universal Credit, UC, even with support offered by the local authority. Many landlords still prefer the housing benefit route and dealing with the local authority, rather than the UC system.

January 2022