Written evidence submitted by Sheffield City Council [EXA 103]

Thank you for the opportunity to offer the view of Sheffield City Council to the Levelling Up, Housing and Communities Committee on the issue of the growth of ‘exempt’ accommodation.

1. Concerns

Sheffield City Council is concerned that there is a rise in agencies exploiting gaps in the national regulatory regime to claim significantly higher levels of Housing Benefit than that permitted by the Local Housing Allowance while in some cases providing minimal support to vulnerable people.

There is currently no regulatory framework which prevents inadequate exempt providers from establishing in Sheffield or elsewhere without any regard for strategic relevance, location, quality, or appropriateness of provision.

Currently, anyone may set up a company to provide accommodation for vulnerable people, regardless of quality. Companies often use shared accommodation because it brings in more money, accommodate customers without regard for the suitability of using shared accommodation and achieve high rental income for very little support. This has a negative impact on individuals who live in these homes, and potentially their neighbours and wider community.

Companies paying higher prices to buy properties to use as exempt accommodation have a distorting impact on the market and reduce the stock available for Registered Providers, individuals, or SCC to purchase.

Subsidy loss is a significant issue for Sheffield. Where customers are in exempt accommodation which is not provided by a Registered Provider (RP) the percentage of Housing Benefit repaid by government is less than 100% and can be as little as 40% of the exempt benefit, so for every person in non-RP provided exempt accommodation, the Council loses money.  The cost to Sheffield is around £500,000 per year in Housing Benefit subsidy loss.

2. Sheffield’s response to customers needing accommodation with support

Sheffield residents who need accommodation with support live in a mixture of commissioned and non-commissioned services.

The commissioned accommodation with support is mostly provided by Registered Provider (RP) landlords, although services are also commissioned with other, non-RP organisations which are then often teamed with an RP. Sheffield is confident that commissioned exempt accommodation, partnered with RPs and provided by organisations long established in the city, is of good quality and represents value for money. Sheffield also provides direct specialist accommodation to its own tenants including people who are homeless, care leavers, those with learning disabilities and older people. 

Like other cities, some people with care needs who receive a direct payment for their care live in exempt accommodation and purchase their care from a support provider or exempt landlord which has not been commissioned.

There is no requirement under the Housing Benefit regulations for a Local Authority to assess this accommodation and therefore it isn’t possible to comment on the quality of the accommodation or the support, as the bar which needs to be reached is simply that minimal support is provided.

For support providers which are not commissioned and are not Registered Providers there is no regulatory oversight.

Non-commissioned services are not Sheffield’s first choice strategically but over recent years there has been an increasing number of organisations which have been trying to establish themselves in the city and take advantage of the current Housing Benefit regulations.

3. Case Studies

A-    One non-commissioned exempt accommodation provider which was previously operating in Sheffield was a company set up with a not-for-profit arm which focussed its business on customers with a range of vulnerabilities including learning difficulties. While it professed to provide a caring, supportive culture it was later found to be providing very low-quality accommodation and the finding of a safeguarding investigation was that of institutional financial abuse of residents.  

B-    A recent approach from an RP provider, supported by a consultancy which specialises in assisting organisations to establish in the exempt accommodation market, is currently offering shared accommodation in an area of Sheffield in which we would not strategically wish to place vulnerable people. The accommodation is offered to differing types of customer (e.g. young women at risk of sexual exploitation, older men) and with very minimal support on offer. This mixed customer group is not a model that the Council would support.

C-    An organisation set up as a company limited by guarantee which provides exempt accommodation to vulnerable customers currently operating in Sheffield was subject to a prosecution by Sheffield’s Private Housing Standards team for providing unsafe and unsatisfactory accommodation. The same organisation has contacted the Council recently to offer places in its accommodation for survivors of domestic abuse.

D-    A non-registered provider of supported accommodation in Sheffield sold all its properties to a private limited company.  Based on information provided to the Council, the purchase price of the properties was significantly higher than their market value.  The private limited company then leased the properties to a registered housing association.  The properties in question are typical, three-bedroom semi-detached properties in a Sheffield suburb.  The lease costs were in the region of £25,000 per annum per house.

To cover the cost of these leases, the registered housing association sets a core rent of £190 per week per tenant. The gross rent, which also includes all the additional costs of providing supported accommodation, is in the region of £350 per week per tenant, so the registered provider is charging over £1,000 per week gross rent for a shared property which would achieve around £200 per week if it were let out as shared accommodation to three young people on the LHA allowance of £65.59 per person.

4. Sheffield believes the inquiry should consider the following points:

• Not all exempt providers are unwelcome or inappropriate. Some exempt providers form a valuable part of commissioned services, especially those which are paired with registered provider landlords.

• However, cities currently have no mechanism under the current Housing Benefit regulations to assess or control organisations which offer poor quality, inappropriate provision or prevent them from establishing themselves.

• A review of the current funding model for locally delivered supported housing is needed; the overall funding of support should be adequate for customers’ needs.  To offer more customer choice, meet shortfalls in numbers of units and achieve an appropriate balanced market, Councils should be able to provide accommodation in-house as exempt accommodation as well as commission services.

• Accommodation and support providers should have to demonstrate that the governance, accommodation and support they provide is appropriate and of high-quality, meets all regulations and represents value for public money.

• The Council is the appropriate body to monitor the appropriateness of the offer and plan for provision. However, this would result in costs to the Local Authority that would need to be funded.

• Otherwise, there should be a national accreditation requirement for exempt accommodation providers, supported with additional regulation that LAs and residents should be able to refer cases to that are of concern.

• That Local Authorities should have greater powers and ability to manage provision of supported accommodation based on their own Strategic Needs Assessment, Supported Housing Strategy and be able to respond to local need as it arises.

• Alignment of existing planning and HMO licencing powers could be used to capture supported housing provision. Resources made available to LAs for proactive inspection and enforcement.

• There should be greater scrutiny of organisations to close the gaps that allow not-for-profit providers to contract with for-profit agents or organisations.

• The connections between accommodation and support providers should be scrutinised and transparency required over what support is provided, how it is meeting customer needs and how it is paid for.

• Greater enforcement powers to tackle providers who do not effectively manage ASB should be put in place.

• Where Local Authorities have to pay the exempt accommodation charge they should be able to claim 100% of the cost back from central government, regardless of the type of landlord, and not lose subsidy on something that is not within their control.

In summary, the current arrangements facilitate provision that doesn’t deliver the quality of homes with support that are needed for some of the most vulnerable residents in the city. This affects the individuals, the wider community and SCC finances. It limits Sheffield’s ability to plan for and ensure across all tenures that housing and support needs are met and this could be improved by regulation and a strategic role for the council being established.

February 2022