Written evidence submitted by Sanctuary [EXA 085]

Sanctuary welcomes this inquiry into the growth of the number of households in exempt accommodation. Sanctuary Supported Living, part of Sanctuary Group, is one of the country’s leading providers of specialist and supported accommodation. Operating more than 500 services we specialise in housing and support for young people, homeless families and individuals, people with physical disabilities, learning disabilities and people with mental health needs. We also run three domestic abuse services and support services for older people and those with dementia. Our services include supported housing, housing management, supported housing with care and residential care and nursing homes.

With over fifty years experience in supported housing we are passionate about ensuring our most vulnerable citizens have access to affordable housing solutions.  As the Chair of the Committee notes, when provided to a decent standard and with proper support, exempt accommodation can be a lifeline for extremely vulnerable people. However, we are concerned about the increasing number of providers whose core business is based on maximum housing benefit reliance with escalating cost base due to an unsustainable lease-based asset portfolio. This presents a risk to our most vulnerable citizens who deserve to benefit from stable affordable homes and is not a good use of public funds.

1. INTRODUCTION

1.1.           The exempt housing sector came into being to solve a genuine problem. The exempt accommodation rules were originally introduced in 1996 to protect charities and housing associations providing supported housing from provisions to limit the availability of benefit for private sector rents. As the charity Crisis states, “the exempt system was an acknowledgement that the costs of managing shared, supported housing could be higher than the norm, and that not-for-profit organisations’ supported housing services may be unviable if benefit levels were limiting using the same rules that applied to mainstream private renting.” There are successful and well-respected services using exempt funding to support the provision of accommodation to meet the needs of people requiring supported accommodation. There is unfortunately virtually no relationship between the payments landlords can claim and the extent and quality of support they actually provide. This has created a sub-market within the sector that typically operates a non-commissioned lease-based housing model which too often creates risks for residents, is disruptive to communities and offers poor value for money for the taxpayer. A report by Prospect Housing estimates the sector is costing local authorities across the UK up to £1 billion a year in housing benefit[1].

2. REGULATION

2.1.           Following the near failure of First Priority Housing Association in 2018, the Regulator for Social Housing (RSH) has been engaging with a range of registered providers (RPs) of specialised supported housing and has downgraded a number of the organisations to a non-compliant grading for governance and/or financial viability. (Sanctuary Group was asked by the Regulator in 2020 to put forward a senior financial expert to be installed onto First Priority’s Board, to support the organisation work through its challenges.) The RSH has raised a number of concerns about the way the model is being used by a number of these providers. It identified five broad concerns which we share[2]:

•               The risk that comes from only having long-term, low-margin, inflation-linked leases as a source of finance – of particular concern is the Regulator’s identification of cases where the tight margin between rental income and lease commitment has led to reduced expenditure on maintenance and statutory health and safety compliance;
• The thin capitalisation of some of the RPs undertaking this model - most of the organisations that are undertaking this model have very little balance sheet capacity, cash or other assets that they can call upon if there are any interruptions to their rental cash flows
• A lack of assurance about whether appropriate rents are being charged – the RSH has found that at least two lease-based providers may be overcharging on rent[3];
• Poor risk management and contingency planning undertaken by some of the RPs;
• Poor decision making as a result of inappropriate governance practices – leading to poor outcomes for the organisations and more importantly tenants.

2.2.           It must be remembered that these concerns relate to a sector which is growing quickly and houses vulnerable tenants. Despite the Regulator having come down hard on many of these providers – highlighting the failure to safeguard tenants, the reputation of the sector and the taxpayers’ interest – its powers are limited by gaps in the regulatory framework.

2.3.           Whilst the Regulator’s current action should limit the new entrants to the market that are seeking to exploit investment opportunities. The emerging consumer regulation for social housing (as outlined in the Social Housing White Paper) offers an opportunity to include specific standards for exempt accommodation and ensure that the Regulator has sufficient powers to work with Local Authorities to prevent exploitation of the system.

2.4.           The government has also recognised the issues in the sector publishing the National Statement of Expectations (NSE) for supported housing in 2020. This is a useful document, which sets out non-statutory guidance for accommodation standards, but we do not believe it goes far enough. It could be strengthened and developed to a full quality assessment framework to ensure that the sector delivers VFM by monitoring outcomes for residents, improving the transparency of charging and using tools such as accreditation.

2.5.           Where providers use exempt accommodation to provide ‘non-social’ housing (broadly speaking homes with rents at market levels) neither the consumer standards nor the rent standard applies. Solutions are needed to ensure that these organisations meet the standards residents deserve.

3. COMMISSIONING

3.1.           Local commissioning practices have fostered this sector by diverting people with complex needs from traditional social supported housing into this largely unregulated sector. There is a need to put the residents of this accommodation at the centre of plans to reform the system. We believe commissioners should be encouraged to employ tools such as population needs assessment and to develop long term partnerships with providers to accommodate local needs. Increasing the provision of suitable accommodation based on local needs will increase tenancy sustainment and reduce failed placements where people can find themselves being moved into more secure and restrictive environments.

3.2.           Longer commissioning cycles with commissioning based on needs will lead to better quality and more sustainable stock. Under the Next Steps Accommodation Programme priority was given to schemes who offered models of long-term stock acquisition. We would support the requirement to disclose for planning purposes an intention to use a building for exempt accommodation and for local authorities to undertake some form of assessment of the suitability of the accommodation proposed for such use and the fitness of persons to be landlords or managers of such accommodation.

3.3.           To plan effectively and assess current and future needs of all client groups, local councils must ensure joined up working between teams, for example housing, public health commissioners and adult social care, authority tiers, local health commissioners and other local partners. Integrating housing better into considerations about health and social care will yield significant dividends to the public purse across local systems. We believe it should be a requirement that housing is formally represented on health and wellbeing boards and/or Integrated Care Partnerships in recognition of the crucial role of housing in wellbeing.

4. CONCLUSION

4.1.           Ultimately, the most effective means of reducing dependence on the exempt sector is to restore investment in social housing supply and providing local authorities with a sustained funding stream to commission support services that meet local needs. The fact that Homes England’s latest affordable housing plan outlines the need for RP’s to develop new specialist supported accommodation is welcome.

4.2.           At Sanctuary our social purpose for over fifty years has been to provide housing and care to those who need it most. Under existing benefit arrangements, high quality exempt accommodation can be a vital part of the social housing landscape. But the current system is too easily exploited with disastrous results for the most vulnerable. Forcing the most vulnerable to spend time in expensive and insecure housing is not only a social injustice it also often exacerbates mental health problems ultimately increasing the support people need to sustain tenancies. We consider there to be a strong case for fundamental reform, of the sector to ensure that the interests of exempt tenants are properly protected.

January 2022