Written evidence submitted by Hilldale Housing Association [EXA 083]
WHO WE ARE
Hilldale Housing Association was established in 2009 and is a specialist Association that develops and manages homes for people who need support which can include those with Learning Disability, Autism, enduring mental health problems or physical disability.
We are part of the Change Housing group that bring expertise and capability together within the group to enable small-scale registered housing providers like Hilldale to create operational excellence, growth and diversification. The group business model adopts practices consistent with a G1/V2 level of compliance with the Regulator of Social Housing (ROSH) standards.
Hilldale`s journey began in Wigan in 2009 to address a locally identified need. It became a Registered Provider (RP)in 2013 and more recently has converted to a Community Benefit Society. It operates under the long lease model and has just under 1000 Tenants and provides 160 homes. The majority of our homes are in the Northwest but we have also offer accommodation throughout the country. In March 2020 we received a regulatory notice and are working with the Regulator to address the concerns that were highlighted.
Our aim in providing this submission is to help the committee understand the challenges from our perspective but also to influence the changes needed for ourselves and others in the sector to realise the opportunities and benefits that we can bring to people who need our supported accommodation to live full, independent and fulfilling lives.
Our responses to the Committee questions
Our most recent Specialist Supported Housing (SSH) schemes have been new build, reflecting the aspiration of both Hilldale and our funders to provide the best quality accommodation for our Tenants for as long as they want to live there. That quality and design comes from years of experience of working with our Tenants and working alongside the Local Authority (LA)and other partners.
In the past some of the accommodation has not been to the standard that we now insist on and therefore our investment in day-to-day repairs and the call on capital funding is higher than anticipated and is a challenge. There has not been the correct balance and assessment of the viability and sustainability of homes and that, on occasions, has led to poor decision making about the use and suitability of accommodation for SSH. We are now dealing with managing these issues and the learning from the experience has been used to inform a new appraisal model for any new opportunities.
Some of the quality issues we experience with historic schemes are unsuitable layouts, poor space standards and no long-term view taken on what will be required to maintain and repair them.
Our requirement is of course to meet Decent Standards, but we are also challenged by the requirement to improve energy efficiency ratings and ensuring that across the stock we can achieve this by 2030. Our business models are based on marginal returns and so the funding for the future asset investment has been based on 30-year asset management with very little opportunity to increase income through Housing Benefit for any additional and unforeseen costs. Most, though not all, of our tenants are dependent upon housing benefit to meet their rental obligations. As an organisation we absolutely support the need for homes to be better insulated and more sustainable for our Tenants, especially given the increasing fuel costs. Our ask of Government in this respect is that funding is made available for us to meet the new standards set.
2. Is the Current model of exempt accommodation financially viable and does it represent value for money?
The model can be financially viable but requires conditions to be met:
The legacy issues of lease commitments made in the past need to be addressed as they place the majority of risk with the RP with no mechanism to exit if a scheme becomes unviable. Looking forward, investment in this sector is still available and on terms that reduce the risks to the RP and supports sustainable growth and partnerships, fulfilling the strategic needs of LA`s and Health.
3. Value for money
Private Investment has come into the sector as the returns are achievable on the properties given the rents are exempt from the rent standard. However there is no public subsidy going into the properties and so the surplus from the return is achieved over the life of the lease through Housing Benefit rather than a one off up front subsidy as is the case in Social housing . From our own perspective we would prefer to work on an asset ownership model where grant is paid up front. This would provide the business with better certainty and ability to manage risk.
If the investment hadn’t come into the sector then the provision of accommodation solutions wouldn’t have been realised and the impact on the savings that are achieved from reduced health and social care budgets couldn’t be declared.
We have the capacity to do more in providing high quality solutions that mean the people can move from high need /high cost institutional solutions to lower cost independent living with support.
4. Are there significant geographical and regional differences in the provision and problems of exempt accommodation?
There are regional difference in the way that Housing Departments assess and determine what is and what is not Specialist Support Housing (SSH) and therefore exempt rent. This results in no payment or reduced payment of HB. This in turn impacts on the sustainability of any existing scheme provided under the long lease model and makes the provision of new schemes unviable and so needs based demand is not met.
Strategically for Local Authorities the provision of much needed accommodation is accepted through the use of a long lease model and there are many good examples of partnership working. More recently though, some LA`s have taken the view not to work with RP`s that have had a Regulatory notice, such as Hilldale. The longer-term issue that the majority of these RP`s face is that there is no Regulatory solution to the issue of meeting the Financial Viability standard under the existing framework. The impact of this being that funding and solutions through the lease model will not be able to be applied in some areas to address the shortage of SSH.
5.What is the proportion of exempt accommodation that is provided by registered compared to non-registered providers and is an appropriate balance being struck?
In these responses we are advocating for more oversight and so given the standards in the regulated sector and the lack of that oversight elsewhere we would want to see more accommodation coming through the regulated sector.
For non-registered providers there need to be checks and balances in place to ensure that vulnerable people are protected and that exempt rents aren’t being used to make excess profits rather it is used to ensure bespoke housing solutions are found with good services and support to meet local need.
6.How does whether a provider is registered or non-registered or commissioned or non-commissioned impact the quality of provision?
For Hilldale as a registered provider, we are required to meet all of the Regulatory Standards and there are a range of interventions and actions that are available to the Regulator to ensure that this occurs. In terms of the quality of accommodation specifically the Home Standard prescribes what should be in place. However in order to meet all the standards the organisation need to demonstrate a high quality of provision through its Governance and Business plans. The recent focus of the Regulator on Consumer standards is welcome to ensure that the voice of the customer can be heard on issues of quality and that RP`s will be openly comparable on this.
Looking at Commissioning then, the LA has a role to ensure that accommodation is not only meeting the quality needs of Tenants but also is addressing the identified shortages of accommodation for vulnerable groups. In a registered context we have to demonstrate support from Commissioners for the scheme and the rent levels that are applicable to it.
In the early days of the long lease model a number of schemes were set up in localities without that support from Commissioners and whilst they provided good solutions they had no formal alignment to the strategic priorities of the Local Authorities. Without that RP status and Commissioned support there are no gateways and quality controls in place. In a sector where residents are vulnerable there needs to be oversight from regulators whether that is from an Housing or Care perspective.
7.How should exempt accommodation be provided and what should the service cost?
For Hilldale and other RP`s we have to meet the conditionality of the Rent standard in order to receive exempt rent status on our Tenancies. The 5 tests to prove that ensure that the rents are appropriate to the schemes and Tenancies and so the qualification is regulated. The involvement of RP`s ensures that through the demonstration of compliance we are meeting the standards required. If you look back over the last 10 years at the RP`s that have developed using the long lease model, private finance has been used to provide accommodation for people needing support. Given the lack of any other available option, these accommodation and care solutions wouldn’t have been available with the resultant increased costs to the public purse.
If other Exempt accommodation is provided and this is not through the registered and Commissioned route then how can those standards be monitored? This would require intervention at the local level by LA`s monitoring and checking the standards of Care and Housing. This will no doubt be a challenge for LA`s given the current financial constraints and so new requirements will need to be in place around that inspection regime and the links made to the eligibility of exempt rent.
For Hilldale the service costs on a scheme by scheme basis vary dependant on local conditions and the nature of the building, its adaptation and the residents degree of disability. This allows bespoke solutions to be found although the rents charged will vary as a result. The control for us in a regulatory context is on the rent standard and showing how rents compare to the comparative market level. Housing benefit departments do scrutinise the rent and service charges based on the average rents in the area and those charged by other RP`s. In making that assessment ourselves we have had to use freedom of information requests to get those details from LA`s and so the lack of easy access to that information points to the information not being readily available to HB teams.
There is no point of reference that rents can make as in the general needs market where LHA and social rents are used. On one hand this is useful for bespoke and costly schemes but on the other doesn’t provide a point of reference where both the RP and the LA know what would generally be acceptable. The committee might want to consider how it can control costs through a guide index.
8.How should the regulatory oversight of exempt accommodation be organised?
As a registered provider we are regulated and received notice last March indicating weaknesses in the organisation that needed to be addressed. This was no surprise to the new Board and management team who had already identified those areas for improvement.
We are working closely with ROSH to make the improvements that have been identified. We would agree that the standards required are as applicable to the Tenancies that we have as anywhere else. One challenge with the current Regulatory framework is that it fits the majority of RP`s with traditional funding models and in terms of financial viability and risk management is not reflective of smaller businesses with funding such as the long lease model. That isn’t to say that we can’t improve our situation but alongside other RP`s in our sub sector we will struggle to meet the thresholds of the financial viability standard.
Our view would be that recent interest in long lease model RP`s using exempt rents hopefully results in a reflection of the standards required in some areas that are bespoke to our model, yet still show compliance, but there are a set of circumstances where the Regulator can be comfortable with organisations like Hilldale. This would facilitate improvements in the sector but also to allow those providers to continue to provide good housing and care solutions in partnership with LA`s and Health. Given the challenges of social care there is still significant interest in funders supporting SSH schemes. Granted they do it for the return although the market has matured and future funding will be based on reduced return and risk for the RP, but also as this helps meet ESG which is an attraction to the sector for funders.
For those that sit outside of the ROSH remit we have commented in a previous section that there has to be a role for LA`s to monitor both the Housing conditions and support that is provided in their areas. This will mean ensuring that standards applicable to the eligibility of exempt rents are met and monitored with the withdrawal of those funds for non-compliance. There also has to be a feedback mechanism in place for Tenants who feel that their Landlord isn’t meeting the standards required. The first stage of that would be to let them know what standard they should be getting.
9.What should be the regulations governing exempt accommodation and how should those regulations be enforced
For RP`s then we have a set of Regulated standards to meet and those have been changed in respect to the rent statement aimed at exempt rent and the 5 tests to be met in order that this can be claimed.
As noted above for those not regulated then there needs to be standards that are a requirement in order to receive exempt rent levels and those standards relate to the quality of housing and of the care and support provided. At present unregistered providers have no incentive to become regulated and thereby work to specified and exacting standards. The tenants service level expectations would then be uniform regardless of their landlord
10.Is there sufficient publicity information available about exempt accommodation?
It has certainly been front and centre of the housing news for the last 18 months as more RP`s are found not to be meeting the ROSH financial viability standards and also the publicity around Birmingham recently
ROSH have themselves been talking to the Local Government Association and individual LA`s about exempt accommodation and the interventions and risks they have been finding with some RP`s.
For Tenants we are up front on the rents and services we charge and of course we support them in the claims for Housing Benefit but they will be focussed on their new home rather than any description about the classification of the building.
For those registered providers who have come under the spotlight of ROSH and are working hard to improve the businesses alongside ROSH there is a concern that we share about the reputational damage caused which affects our partnership arrangements and has impacted on future growth opportunities. As a business Hilldale wants to continue to grow and develop more schemes that will fall under the exempt banner but we will do this in a different way from the past to help improve our financial viability but also to ensure that the right housing solutions are provided in the right place for the right people.
There is a need out there that isn’t being addressed for some of our most vulnerable people who need a home with some support to live independently. When applied correctly and in partnerships with LA`s and Health the exempt rent model can work really well and is flexible enough to support those bespoke solutions whilst at the same time attracting private funding.
January 2022