Written evidence submitted by Midland Heart [EXA 069]

We are committed to improving access to safe, comfortable and affordable housing options.  This includes accommodation with support provided by specialist partner organisations.  Our supported accommodation offer is designed to foster independence, and to preserve health by enabling customers to pursue personal interests and goals. 

Issues arising in exempt housing provision are commonly linked to a lack of regulation and oversight, leading to insufficient quality control.  We therefore feel that exempt provision is best delivered by registered social landlords.

Key points

• Exempt provision is used by members of society in high need of the sound foundation that a safe and comfortable home can provide.  The lack of a single route into exempt accommodation, and a single structure responsible for ensuring its quality, make it very difficult to gauge its effectiveness.  Whilst some providers are registered and regulated, others are not and may lack expertise.  The potential for profit from the high rents chargeable may also attract rogue landlords with little motive to offer good services.

• Exempt accommodation is nevertheless relied upon to house vulnerable individuals in many locations where affordable and supported housing is in short supply – in particular in cities and larger towns that attract homeless applicants from the surrounding area.  Whilst some local authorities have instituted quality control measures within their benefit services, others currently lack the resources to avoid or discourage substandard provision.

• Nevertheless, establishing a new quality control regime is not necessary in our view.  The social housing sector is already experienced at housing the vulnerable and subject to robust oversight.  A higher proportion of social homes meet the Decent Homes Standard than that seen in the private rented sector or among owner-occupied properties.  Offering enhanced housing benefit only to registered providers could ensure value for money, without requiring local authorities to duplicate oversight already covered by the Regulator of Social Housing and the Care Quality Commission.

Detailed responses

What is the quality of exempt housing provision?

There is no straightforward answer to this question.  ‘Exempt’ housing is a catch-all term for many different types of housing, provided by a wide variety of individuals and organisations. 

Historically, exempt accommodation has usually been provided by landlords in the social or voluntary sectors; and the claimant provided with care, support or supervision by the landlord or their agent.  More recently, the attraction of exempt accommodation to some more unscrupulous landlords has been that it is not subject to rules that normally limit the amount of rent covered by benefits.  Widespread shortages of low-cost housing and supported accommodation often leads to reliance on this model to house vulnerable people. 

The quality of provision of exempt accommodation is therefore highly variable.  At the better-quality end of provision there are registered social landlords (RSLs) that rent accommodation and provide support themselves, or contract with an external support provider to do so.  Registered providers are overseen by the Regulator of Social Housing.  There are also circumstances where some accommodation is overseen by the Care Quality Commission (CQC) where registered care is being provided. 

There is however, at the bottom end of the market, a significant problem with poor quality, multiple occupancy housing where the support provided is minimal, if provided at all.  This is linked to there being no single referral route into exempt accommodation.  In Birmingham alone, there are a plethora of routes – including prison release programmes, self-referral, and word of mouth.  The quality of exempt accommodation is therefore dependent upon local availability and the practices of individual landlords. 

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

In answer to the first part of the question, it would appear it is a financially viable model.  Indeed, the potential for high rent charges has attracted rogue landlords with little interest in supporting tenants.  In addition to increased housing benefit entitlements for exempt status, recent taxation changes grant a greater allowance for wear and tear, appealing to landlords primarily pursuing increased profits.  Where local authorities are able to take action successfully, the fines issued by the courts following a successful prosecution are often insufficient to act as a deterrent because exempt accommodation can prove so profitable.

Where quality control measures are put in place, local authority funded supported accommodation can arguably receive strong performance oversight than that funded via the DWP, as councils’ budget pressures drive optimal use of scarce resources.  However, the variety of exempt provision makes it difficult to say with any certainty whether exempt accommodation offers value for money.  The enhanced rents chargeable here are intended to include support, which in most cases would be expected to nurture demonstrable progress toward appropriate milestones.  However, the level of care or support provided can vary significantly: occupants may present with complex needs, or simply have very limited mainstream housing options. 

It is unclear how local authorities ensure that appropriate support is being delivered.  For example, a standard proforma discussing support needs in broad terms may be accepted by a housing benefit department as sufficient evidence that support is being provided.  Relevant case law includes a finding that informally assisting an occupant to access permanent housing, qualified the property for exempt status.  In another case, it was accepted that helping write a CV qualified a property as exempt. 

However, some occupants may have multiple significant issues to address.  Recent research indicates that many occupants of exempt accommodation are escaping domestic abuse or rough sleeping; are refugees or ex-offenders; or are living with mental health or substance abuse issues.  Some landlords of exempt accommodation may lack the resources, skills, or experience to provide adequate support tailored to their occupants’ needs.

Pressure caused by a lack of social housing and suitable supported housing means that referring services are under pressure to meet targets, upon which future funding may depend.  This can drive the reliance on substandard housing providers when no other alternative is available.  Further pressure is applied by the duties imposed by the Homelessness Reduction Act 2017, where local authorities lack the housing or other resources to ensure that those at risk of homelessness are placed in safe and suitable accommodation. 

Tenants may therefore find themselves in unsuitable accommodation, and at increased risk.  Problems arising in exempt accommodation offered by unregistered providers may include antisocial behaviour, sexual exploitation and worsening mental and physical health conditions.  This effectively puts occupants at risk of being ‘warehoused’ in exempt accommodation where their support needs are not met, leaving them unable to move on easily into more mainstream or permanent housing. 

This is not to say that occupants necessarily stay put indefinitely; the sector actually shows a good deal of ‘churn’, due to occupants moving on to find alternative homes when their support needs are not met.  In practice this can generate additional problems to be addressed, with corresponding costs to the public purse.  Vulnerable individuals may repeatedly present themselves to charities or to other housing providers for assistance in finding somewhere new or may turn to criminal activity or require medical intervention during periods of street homelessness.

Birmingham City Council’s own investigation into the city’s rapidly-growing exempt provision has found that concentrations of exempt housing may also carry a ripple effect for the wider neighbourhood.  The Council’s report mentions higher incidences of antisocial behaviour, crime and littering in areas where such properties are poorly managed, negatively affecting other local residents and carrying costs of their own to the public purse.

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

Whilst, again, it is hard to say given the lack of strategic oversight, it is likely that the problems are more intense in major cities and towns.  This is for two reasons: firstly the greater concentration of people in general, and secondly a ‘vacuum’ effect caused by individuals in need of rehousing either approaching or being referred to places with, or perceived to have, more provision or better services. 

This is especially true of cities such as Birmingham and Leicester which have retained their housing stock within the local authority.  This additional pressure leads to greater reliance upon lower-quality housing and support services to fulfil homelessness/housing duties.

The recent sharp increase in exempt accommodation in Birmingham, for example, has been driven in part by the use of larger homes as houses in multiple occupation (HMOs).  This trend in turn grew out of a shortage of social housing, coupled with a large private rental sector with many larger family houses.  We would, however, also argue that it appears easier in Birmingham to gain approval to use a property as an HMO than in might be in other Midlands towns and cities.  The local proliferation of HMOs appears to fall outside any overarching housing strategy.

Where local authorities attempt to exert greater control over how enhanced housing benefit entitlements are assessed and paid, however, this can itself lead to further issues with provision.  Birmingham City Council has recently adopted a policy requiring a support plan as evidence before enhanced housing benefit could be paid.  This led to issues where a vulnerable customer took time to trust and engage with support services and a support plan could not be agreed straight away.  In a minority of cases, customers have abandoned the accommodation due to anxiety over rising rent arrears.

Birmingham’s benefit service has now responded to our representations on this problem by dropping the ‘support plan upfront’ requirement for commissioned services.  This does not fully resolve the issue, however, as we operate services where commissioned and non-commissioned beds are located in the same building.  We now have concerns that the apparent double standard may jeopardise efforts to build rapport with incoming customers, who may not appreciate the distinction between commissioned and non-commissioned beds. 

Whilst Birmingham’s monitoring and ‘payment by results’ approach is applied to approximately 2,000 commissioned supported homes, a further 22,000 HMOs are not subject to the same scrutiny.  Indeed, the council’s private rent team is unlikely to have sufficient resources for this.  A consistent approach across all local authorities may help to clarify the issue for all concerned.

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

It is very difficult to answer these questions due to the lack of strategic planning and oversight of exempt accommodation.  Birmingham City Council’s recent report indicates that, where providers cease operating or close referrals temporarily, this can create greater local reliance on less reputable landlords.  In practice, any person or organisation can run an exempt accommodation service, provided they can evidence that they are providing support to residents – as we have said above, case law has said this support can be very minimal in nature. 

The current situation mirrors that prior to the Supporting People programme (implemented in 2003).  In the original policy documents for the programme[1] [2] it was specifically stated that a lack of strategic planning and oversight had led to a situation where local authorities had little information about what services were being provided and paid for from housing benefit in their areas.  Because of the nature of the services that were funded by Supporting People, these were almost exclusively ‘exempt’ in nature.  The programme provided a framework for planning, commissioning, oversight, and regulation of these services. 

Since the programme was effectively abandoned in 2010 by the removal of the ringfence from funding, and its subsuming into local area agreement funding, oversight of the exempt sector has largely disappeared.  This will also not have been helped by the significant cuts to local authority funding from 2010. 

Further, the institution of Universal Credit (UC) as the method of paying for housing costs has removed the role of local authorities who were previously responsible for assessing and paying Housing Benefit.  Previously, housing benefit departments played a key role in scrutinising exempt accommodation in their areas.  This role has been at least severely curtailed, if not removed altogether, by UC being centrally administered and the resulting cuts to local authority housing benefit departments. 

It is also hard to say if an appropriate balance is being struck.  The question pre-supposes that such a balance exists – we do not think it does.  In our view, exempt accommodation should be managed by registered providers.  Whether these are in the public or private sectors is largely irrelevant.  The question is not so much one of balance but of quality.

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

Again, it is hard to know how these factors impact quality, though individual local authorities may establish their own checks for commissioned accommodation.  However, it is highly likely that providers registered with the Regulator for Social Housing (RSH) or Care Quality Commission (CQC) are providing higher quality services compared to unregistered providers, because they are subject to this oversight. 

That said, due to the variety of providers and access routes, the support side of this sector has relatively little monitoring or accountability.  Whilst the RSH’s incoming oversight of customer service and tenant engagement by social landlords incorporates important functions such as communication, safety and ASB, it is not designed to focus specifically on support needs and outcomes. 

Whilst the sector encompasses varied approaches, for some social landlords support is not a primary function; many focus their operations on meeting housing need.  Support for exempt accommodation residents would therefore be better scrutinised separately, as discussed below, rather than further broadening the Regulator’s customer service remit and potentially diluting its impact.

The Regulator could nevertheless play a greater role in overseeing smaller registered providers’ operation of exempt accommodation.  Organisations managing fewer than 1,000 homes are monitored less closely, and landlords of HMOs may simply move into operation as a smaller registered provider in order to pursue enhanced rents.  It can then take around 18 months for substandard provision to come to light.  We would like to see a preliminary approval process established, whereby the suitability of the accommodation and the provider are assessed first.  Similarly, more selective licensing of HMOs could drive improvements in exempt provision.

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

And,

How should the regulatory oversight of exempt accommodation be organised?

Our view is that as exempt accommodation mostly houses and supports some of the most vulnerable people, it should be subject to regulation.  We therefore see two possibilities for this. 

Firstly, the Government could set up a bespoke programme to provide quality assurance, and financial and strategic oversight.  Again, we would point out that this was done at some expense between 2001 and 2003 with the set-up of the Supporting People programme.  This included significant efforts to gauge the scale and cost of services via transitional arrangements and implement a quality assessment framework.  The cost of the programme in the first year was c.£1.8 billion. 

The second option would mean changing the regulations to mean that only providers registered with either RSH or CQC could receive the enhanced payments associated with exempt accommodation.  This would ensure that providers are subject to regulation around the at least the quality of accommodation provided.  Registered social landlords are also required to be part of the Housing Ombudsman Scheme (HOS) which provides formal oversight of complaints processes and acts as a final appeals body for complaints. In the case of CQC registered services, they would be subject to the wider care standards framework. 

However, this leaves the oversight of support provided by registered providers.  A method of regulating this with minimal cost and effort would be to give all local authorities the power and additional resources to scrutinise such services before agreeing payment of the enhanced benefits rates.  This approach could also lead to a more efficient allocations process, reducing current void rates triggered by lack of clarity regarding access to regulated exempt accommodation.

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

As we have suggested above, exempt accommodation providers should be registered with a regulator (either RSH or CQC) as a minimum requirement.  This would at least provide regulation of housing conditions and give some level of assurance that reputable, competent providers are providing support.  An equivalent to the previous Supporting People programme could be considered, although given the time, work, and funding this would require, it is unlikely to be considered a viable option.  We therefore think that registration with one of the existing regulators, coupled with an enhanced role for local authority housing benefit departments, would be the best way forward. 

Locally to Midland Heart, Birmingham City Council has considered supporting a new internet-based information resource conceived as ‘Rightmove for the homeless’.  The website would advertise void rooms provided by reputable landlords, with date-stamped photographs of the accommodation to demonstrate its quality, enabling advisors and referral agencies to put service users in touch with trusted landlords more easily.

Sandwell Metropolitan Borough Council has adopted a different approach, placing quality control for exempt accommodation in the hands of its benefit service.  The council now requests a detailed individual support plan for each new housing benefit application relating to exempt accommodation.

Regional devolution may also offer potential answers.  The mayor of the West Midlands Combined Authority has shown a keen interest in reducing homelessness across the region and set up a taskforce in relation to this.  The advent of sharing resources across local authority boundaries could potentially reduce the issue of cities’ ‘homeless vacuum’ effect drawing high-needs individuals into the city from neighbouring areas unable to help them.  This might also prove beneficial to people unable to return to a geographical location due to a risk of violence or abuse.

The practice of commissioning short-term accommodation via local authorities could lead to greater transparency and reduce the number of low-quality HMOs claiming exempt status to garner profit from inflated rents.  Redirecting this income stream from unscrupulous or ill-equipped providers would, however, leave the question of where their tenants could go next. 

Is there sufficient publicly available information about exempt accommodation?

Probably not.  Indeed, it seems highly unlikely that most of the public know what it is and what it is for.  It also remains unclear how many people are living ‘under the radar’ in inadequate shared accommodation, and it is therefore unlikely that local authorities will be able to include their needs accurately when reporting to central government on local funding requirements.

Without an overarching strategic, quality control system, there is little collation of data or mapping for the exempt sector as a whole.  Nor is there any guarantee of progress in relation to occupants’ issues, or of demonstrable positive outcomes.  Enabling local benefit services, the RSH and the CQC to share information more easily could achieve sufficient transparency to ensure that enhanced benefit claims are funding suitable and effective supported accommodation.

January 2022