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Council breaches Rent Standard for converting more than 1,000 social tenancies to affordable rent
East Suffolk Council has breached the Rent Standard and failed to comply with legal requirements after it converted more than 1,000 social tenancies to affordable rent without receiving permission and failed to apply the 1% rent reduction to some charges.
In a regulatory notice published this morning, the Regulator of Social Housing (RSH) confirmed that the council had breached the Rent Standard and the Home Standard, the latter for issues including a failure to carry out fire risk assessments (FRAs).
According to the RSH, East Suffolk Council self-referred to the regulator in February as it had identified issues with the completion of statutory health and safety checks and the level of rent it had charged a large number of its tenants.
On the Rent Standard, the council told the regulator that in 2015 it entered into an agreement, via a consortium, with what was then called the Homes and Communities Agency (HCA), which allowed it to convert up to 260 homes from social to affordable rent.
However, the council believes it has converted more than 1,000 additional tenancies from social to affordable rent outside the terms of the agreement with the HCA.
East Suffolk Council identified the issue in early 2020 and acknowledged to the regulator that it should have referred the matter at the time, according to the notice.
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Meanwhile, an external consultancy recently hired by the council to review its approach to rent-setting has identified that in 2018 additional charges had been added to multiple rent accounts that were defined as ‘de-pooled rental charges’ as they did not qualify as service charges.
The council is investigating whether these charges should have been levied, but has identified that these charges were not reduced during the period of the Welfare Reform and Work Act 2016, which required social landlords to reduce their rents by 1% annually for four years.
A detailed audit of the council’s rent data has now begun, which the regulator said may uncover further issues.
The council has reported that the total overcharge to residents as a result of the conversion to affordable rents is in the region of £2.58m, while the overcharge in relation to the de-pooled rental issue is believed to be in the region of £380,000.
In the notice, the RSH said: “The scale and seriousness of the breach of rent requirements reported by East Suffolk Council is significant and has been compounded by the fact the council continued to charge incorrect rents for a period of almost two years while knowing this may not be permissible.”
The regulator said that the council now understands the issue fully and has developed a detailed plan that includes reimbursing tenants and other bodies who have been overcharged.
East Suffolk Council has also been found to have breached the Home Standard after it told the regulator it had not carried out FRAs on all of its buildings and did not have evidence that remedial actions had been completed following previous assessments.
The council also does not have data to provide assurance that it has completed tests and inspections in relation to electrical safety, water safety, asbestos management or lift safety, the regulator said.
As part of its investigation, the regulator has discovered that 100 FRAs were overdue, as well as more than 200 communal electrical inspection records.
The regulator said that East Suffolk Council is putting in place a programme to rectify the failures, meaning it will not take statutory action at this stage.
Steve Gallant, leader of East Suffolk Council, said: “Following a report provided to me earlier this year by the council’s newly appointed head of housing I announced that an immediate and thorough review of issues dating back to the time of Waveney District Council was urgently needed. I am pleased that a wide-ranging programme of remedial work is now under way both in relation to the issue of rent-setting and health and safety.
“The regulatory notices which have now been published are fair, and essentially present what we already knew, incorporating a range of issues which we are working hard to resolve. The work will continue and it will be completed as soon as possible.”
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