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Exempt accommodation provider being investigated by regulator halts issuing new leases
A Birmingham-based exempt accommodation provider is stopping all new lease agreements with landlords after being placed on the English regulator’s gradings under review (GUR) list, Inside Housing can reveal.
Birmingham-based Concept Housing Association is stopping all new lease agreements with landlords after being placed on the English regulator’s gradings under review list #UKhousingConcept Housing Association has told landlords in Birmingham that it will not be entering any new lease commitments with immediate effect, in what it described as a necessary step to “preserve the long-term future of the organisation”.
In the letter, seen by Inside Housing, the exempt accommodation provider said the decision came in “the light of recent events at Concept and in the wider market generally”. The landlord said it would continue to operate with existing properties and landlords.
Last month, Concept was one of three exempt accommodation providers to be placed on the Regulator of Social Housing’s (RSH) GUR list. The regulator said it is investigating matters at the association that may impact its compliance with its governance and financial viability standard.
Ash Shahada Housing Association and 3CHA were also placed on the list.
David Fensome, chief executive of Concept, told Inside Housing that it took the regulator’s decision “very seriously” and that this was one of the factors that led to the association’s decision to not enter any new lease arrangements.
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He added: “We have grown rapidly over the past two years and we have reached a point in our growth plans when it is the right time to consolidate our portfolio. It is important to make sure that our governance continues to keep pace with our growth.
“However, our board will keep under constant review the decision to suspend taking on any new lease agreements.”
Concept operates in the exempt accommodation sector, a subset of supported housing that is funded directly by the Department of Work and Pensions.
Because such organisations provide loosely defined care and support services, their tenants can be exempt from housing benefit caps and landlords can charge much higher rents than normal landlords.
Exempt accommodation is often used as a means of housing those with very few other housing options, such as prison leavers, rough sleepers, refugees and migrants, and those experiencing substance abuse issues.
In many cases, registered providers employ managing agents to provide the accommodation and support services by entering into short-term lease arrangements. Many of these managing agents then lease properties off individual landlords or professional organisations.
However, Concept’s model is slightly different, with the association not using managing agents and leasing properties directly off landlords.
Concept is a good example of how the exempt accommodation sector has grown in Birmingham in recent years. In early 2018, there were an estimated 11,000 exempt claimants across Birmingham. As of October last year, this number had grown to 20,500 exempt bedspaces – provider Concept Housing was responsible for 2,733 of those bedspaces.
The RSH has recently taken a keener interest in these providers, with a number being deemed non-compliant or being put on its GUR list. Last week, large Birmingham-based association Prospect announced that it would be closing down in the summer.
The landlord said the decision was taken after it found that “it would be unable to provide the standard of accommodation and support we and the regulator expect, while being financially viable and compliant in the long term”.
When asked by Inside Housing if the closure of Prospect had any influence on its decision to not enter into any lease arrangements, Mr Fensome said: “No, but we do understand that the closure of Prospect Housing has given cause for concern across the sector and increased scrutiny therefore is not unexpected.
“Our initial discussions with the regulator have been very positive and we look forward to a time when we are able to demonstrate that we are fully compliant.”
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