The cost of living
Councils and supported housing providers across the UK are locked in battle over rent levels. Here, Martin Hilditch reveals the scale of the problem for the first time
For the first time the true scale of one of housing’s bitterest - but least talked about - battles has emerged.
Across the UK, councils are pitted against supported housing providers in a fight in which both sides claim to be in the right. The complexities are such that in some cases council departments are falling out with the independent rent officers who decide what rents are appropriate.
Put simply, this is a story about rent levels. Many councils think some supported housing providers in their areas are cheating the system by inflating their rents well above the actual cost of providing supported homes. In some cases the councils are stopping little short of alleging fraud.
Providers, on the other hand, argue that councils are trying to restrict housing benefit payments that cover their tenants’ rents to levels that are so low they are putting some smaller landlords out of business. Either through ignorance or because they are desperate to make savings, the providers argue, local authorities are putting vulnerable people under incredible stress and the support they rely on at risk.
Providers are able to charge higher rents for supported housing than general needs homes because its specialist nature means it can be more costly to build and maintain. Such housing is known as ‘exempt accommodation’ because it is exempt from restrictions to housing benefit that applies to mainstream rented homes.
The fight over rent levels for exempt accommodation has tended to rage quietly but passionately beneath the surface, occasionally surfacing publicly at tribunals or even judicial reviews. Thanks, however, to hundreds of documents obtained under the Freedom of Information Act, both the scale of the problem and the anger it is provoking can be revealed. All the FOI documents were responses - which have not been published - to a 2011 Department for Work and Pensions consultation on the future funding of supported housing.
So what arguments are councils and landlords putting forward regarding rent levels and who is in the right?
Mansfield Council’s response is a good starting point for the uninitiated. It states: ‘There is currently nothing to prevent [private] landlords from setting up their own support companies using self-referral to bypass any independent scrutiny, using unqualified support staff to provide little or no care to achieve higher rates of housing benefit funded by the taxpayer.’
Darlington Council puts it even more directly. ‘Under the current arrangements, unlimited sums of housing benefit are paid to meet high, uncontrolled levels of rent and service charges.’
Abusing the system
Birmingham Council suggests that even when the accommodation itself is clearly designed for people with support needs, ‘we are not always convinced that all claimants housed in this type [conventional supported housing] of accommodation do actually require the care, support and supervision that is on offer’.
One benefit manager from a north west local authority says she is also convinced there is a problem with some providers abusing the system.
‘We have mainstream accommodation run by a charity which is very expensive, which has no adaptations at all and is not in particularly good condition but costs a similar amount each week in rent [to very specialised accommodation],’ she states in her consultation response.
It is easy to see why councils are keen to scrutinise costs. A separate freedom of information request revealed Sefton Council’s exempt accommodation budget leapt from £825,699 in 2010/11 to £1.1 million in 2011/12.
Wirral Council faced a similarly large jump. Its budget for exempt accommodation soared from £504,551 in 2010 to £976,556 in 2011 (although it stood at £1 million in 2009).
This is all evidence, perhaps, that the system is open to abuse. But there are hints, even within the council responses, which suggest there might be more to the story.
As the benefits officer from the north west adds: ‘Even when we have restricted rents… We have been overruled by tribunals.’
Ealing Council admits that when rent officers make decisions about what level of rent is reasonable ‘the valuation provided does not take account of the specialist nature of supported accommodation’. Instead, it states that valuations about acceptable rent levels in supported housing are ‘provided on the basis of the “going rate” for general needs accommodation’.
It is mandatory for councils to refer decisions to rent officers from the Valuation Office Agency if the provider is a not-for-profit private landlord or charity. Councils can use their discretion when it comes to housing associations and landlords registered with the housing regulator - and in practice referrals are not regularly made.
Knowsley Council goes even further, stating that it thinks rent officers have ‘very little understanding of the specialist needs of the client groups living in supported housing and therefore are not the best people to make life-changing decisions about supported housing’.
The overall cost of exempt accommodation claims from non-registered providers is estimated to be between £70 million and £130 million, according to estimates in research carried out for the DWP.
So what do the charities and not-for-profit landlords providing exempt accommodation think? The majority say they are experiencing big problems receiving rents that reflect the cost of providing homes in some areas.
London-based homelessness charity Broadway sums up the frustration of many, stating: ‘We are currently subsidising rents where adverse decisions have been made while we are trying to appeal them or remodel our services due to shortfalls - but this not a sustainable solution.’
‘We have had different decisions [on benefit payments] for the same rents for different people in the same property.’
Umbrella body Homeless Link goes further. ‘The rent officer referral process is making homelessness services financially unviable,’ it states. ‘One of Homeless Link’s members reports that for one of their hostels, the housing benefit office are currently paying the local housing allowance rate, with the service receiving £102 against costs of £179 per week. At a supported housing project £115 was awarded against costs of £170 per week.’
Refuge, which provides accommodation for victims of domestic violence, states that assessments of acceptable rent levels can vary by as much as £300 in neighbouring London boroughs. One borough it works in had set a rate of £80 a week and another £400 for similar housing, it says.
Exempt accommodation providers which think benefit levels are being unfairly restricted can challenge the decision in a tribunal. But the FOI documents reveal that in a significant number of cases legal wrangles over rent levels are running on for years, often due to the length of time it takes to get a hearing, the time it takes both sides to provide evidence, or due to either side appealing decisions.
Hackney Council states that it ‘routinely waits six months for a tribunal hearing date’ and North Somerset Council admits there have been ‘long drawn-out tribunals’. The aforementioned benefits officer adds that housing benefit levels with some providers ‘are still subject to ongoing dispute and have been since 2002’.
Depaul UK says it has received rents ‘up to £100 per week, per resident, below costs for six months while awaiting a decision’. ‘This puts the service in jeopardy,’ it adds.
Community Housing Cymru states that in one case it saw original rent levels reinstated for one resident ‘after 18 months’. ‘The process was stressful for the tenants [who have to submit the appeal - landlords cannot appeal on their behalf] and costly,’ it states.
Phil Shanks, founder of SAF Housing, submitted the FOI request that led to the documents being released and has also been caught up in protracted tribunal cases.
‘In general over the years and in my experience, housing benefit tribunals take between two-and-a-half to four years to complete,’ he states. ‘Our experience suggests that 90 per cent of supported housing clients will have to go through the tribunal process to ensure that their rents are met. We have a 100 per cent success rate with our tribunal attendance on behalf of our clients.’
These battles are important because they make a fundamental difference to society’s most vulnerable people - and in some cases the viability of the landlords which house them. Given that the government is still finalising plans for reforming housing benefit for supported housing, they could also have an impact on future resource levels.
No one is arguing that supported housing costs should not be scrutinised. However, even some councils have admitted to doubts about the decisions made by rent officers.
While supported housing providers might not always get what they want, it is vital the system enables them to get what they need. As Alice Evans, head of policy at Homeless Link, states: ‘There are genuine costs and they have to be met.’ At the moment, as the FOI responses reveal, there is a significant question mark about whether this is happening.
The cost of everything: exempt accommodation in Sefton
annual budget 2011/12
exempt accommodation claims
highest individual annual award
core weekly rent
personal charges for utility bills