Category: Finance & Funding

Categories
Finance & Funding

The Consultation on Rent Capping & Enhanced Housing Benefit

Rent Cap

As you’re doubtless aware the Regulator for Social Housing is currently consulting on the introduction of a core rent increase of 3%, 5% or 7% for social housing. The consultation is here.

The reason for the consultation is the significant increase in the rate of inflation in circumstances where social housing core rents can currently be annually increased by CPI +1%. If CPI is around 10%-11% or more, then a core rent rise of this magnitude is unsupportable by the great majority of mainstream social housing tenants. Many would argue that any core rent rise is unsupportable by many social housing tenants.

What is significant, to me at least, about this consultation is that supported housing is not exempt from the cap, and that supported housing is expected to meet the definition of “low-cost rental accommodation” (e.g., homes let at Social Rent or Affordable Rent). 

The Regulator hasn’t entirely closed the door on exempting supported housing from the proposed cap, much depends on your responses to the consultation. If you have supported housing stock, please do respond to the Consultation and set out clearly the implications of core rent capping for your schemes.

When rent convergence was introduced back in 2010, the Regulator (then known as the Housing Corporation) seemingly omitted to consider supported housing before deciding to give supported/sheltered housing 10% leeway on the core rent convergence figure, which is not a realistic reflection of the additional core rent costs of supported housing.

Assuming that the Regulator is limiting its focus to the core rent, not the gross rent, when putting together enhanced Housing Benefit claims for supported (and some sheltered) housing we must offset the core rent costs in excess of the allowed amount into the service charge in order to conform with core rent compliance. This would make a mockery of the core rent compliance requirements were it not for the fact that it’s already a mockery in the context of supported housing, because the core rent costs of supported housing routinely exceed the allowable core rent amount, even with the 10% leeway. If the Regulator wishes to cap the gross rent for supported housing, then we have a big problem.

I am currently involved in supporting RP clients to respond to demands from the Regulator for Social Housing that RPs structure (specialised) supported housing rents at “social levels”. In so doing they say that for supported housing to be deemed as “social” it must comply with section 69 of the Housing and Regeneration Act 2008, this is even though Specialised Supported Housing is supposedly exempt from the Rent Standard entirely. Again, in this context, the Regulator hasn’t clarified whether it means the core rent or the gross rent.

Furthermore, I was told by a social impact investor that the Regulator for Social Housing had told them that “exempt rents will be beyond our regulatory scope”. Again, do they mean only Specialised Supported Housing, within which the core rent is effectively unrestricted, or do they mean all types of supported housing where the gross rent levels routinely exceed “low cost/social rent” levels?

If they’re referring to the gross rent, what this means is that the Regulator for Social Housing does not regard supported housing in receipt of exempt rents to be “social housing”. For RPs that have accommodation that is deemed to be “social housing” as well as supported housing with exempt rents, this shouldn’t make a difference to enhanced Housing Benefit entitlements as they’re regulated organisations with regulated occupancy agreements. In fact, the removal of inappropriate regulatory demands from supported housing providers could be helpful. However, for RPs that only have “exempt rent” supported and sheltered housing, they face the potential prospect of being told they don’t have any “social housing” and will therefore be subject to deregistration with a significant threat to their enhanced Housing Benefit entitlements. If this does occur the Exempt Accommodation Project may be able to help. Please contact me about this.

Enhanced Housing Benefit.

Whilst the position of the Regulator for Social Housing on supported housing and exempt rents is at best ambivalent, it is nonetheless important for RP and non-RP providers of supported (and some sheltered[1]) housing to review their enhanced Housing Benefit claims, especially in the light of surging energy costs that equate to around 70% of the inflation rate. Energy costs are a service charge cost, not a core rent cost. 

Similarly, maintenance and repair costs are increasingly expensive. To the extent to which this is an issue for mainstream social housing, which it definitely is, it’s a huge issue for supported and sheltered housing. The opportunity to try and offset at least some of the increased maintenance and repair costs through a revised enhanced Housing Benefit claim is important to take.

As you may know, we work with Danny Key on larger enhanced Housing Benefit projects and only charge if we are successful in increasing your enhanced Housing Benefit entitlements (we charge a percentage of the increase we achieve, payable only when you are in receipt of the increased amounts, and payable over a period of up to 12 months).

It is increasingly difficult for supported housing providers that don’t work with RPs to negotiate enhanced Housing Benefit claims. If you’re in this situation the Exempt Accommodation Project may be able to help if you’re a local authority approved provider. The Exempt Accommodation Project is very busy now, and we are always looking for community-based RPs to work with us on this whilst they develop a leasehold portfolio and an attractive revenue stream. Please contact me directly about this.

Supported housing providers who want help with enhanced Housing Benefit claims, with or without an RP, please contact revenue@michaelpatterson.co.uk. If you have Danny’s contact details and you go direct to him, please cc revenue@michaelpatterson.co.uk and let Danny know you’re contacting him having read this briefing.

  1. Where the landlord provides care, support & supervision that is “more than minimal”.
Categories
Finance & Funding

Problems Claiming Enhanced Housing Benefit?

What’s The Problem?

Charities, voluntary organisations and registered providers (housing associations) that provide supported housing and/or tenancy sustainment services are entitled to Enhanced Housing Benefit to provide Intensive Housing Management. However, all things are not equal and some organisations are, in practice, more entitled than others.

If your organisation has decided to set up supported housing in a local authority area without consulting with the local authority in question, don’t be surprised if you’re refused Enhanced Housing Benefit. We’ve been involved in Enhanced Housing Benefit claims since 2005 and we reinvented the term “Intensive Housing Management”, but we don’t represent supported housing providers that operate without the approval of local authorities.

However, there is no guarantee even if your organisation is entitled to Enhanced Housing Benefit and that you operate with local authority approval that will be successful in claiming it.

I metioned that all things are not equal. A registered provider/housing association landlord usually has fewer problems in obtaining Enhanced Housing Benefit because, in such cases, the local authority can fully recover from the DWP the Enhanced Housing Benefit it pays to registered providers.

In the case of a charity or voluntary organisation the local authority can only recover 60% of the difference between the Local Housing Allowance level and the amount of the Enhanced Housing Benefit claim. Small wonder then that charities and voluntary organisations are finding it harder and harder to claim Enhanced Housing Benefit.

We hear increasing numbers of situations where charities and voluntary organisations that provide supported housing are being told by local authorities that they must become registered providers in order to qualify for Enhanced Housing Benefit and/or be included on local framework agreements.

For most charities and voluntary organisations, applying to become a registered provider is akin to trying to get the proverbial camel through the eye of a needle. However, we understand why local authorities have a problem over subsidy loss due to Enhanced Housing Benefit claims they can’t fully recover, even though the “get registered as a registered provider” solution is a non-starter for the vast majority of supported housing providers.

So What’s The Solution Then?

In short the solution is the Exempt Accommodation Project which we set up earlier this year.

The Exempt Accommodation Project seeks to match non-registered supported housing providers, irrespective of their legal identity (charity, voluntary agency, private provider) that own or lease their properties with compatible registered providers in a more equitable way than traditional registered provider/managing agency agreements. The properties in question are then leased by the supported housing provider to the registered provider on a 5-7 year basis. As a consequence, local authorities can fully reclaim the Enhanced Housing Benefit they pay, because a registered provider is the landlord.

Since we set the Exempt Accommodation Project up we have been inundated with interest from providers and local authorities. We’ve also been successful in attracting a number of small, community-based registered providers to act as landlords by taking a short-term lease on supported housing providers’ properties.

These registered providers must, as a minimum, be responsible for:

  • Voids
  • Health & Safety
  • Tenant satisfaction
  • Administration of occupancy
  • Physical property standards

For managing the above, usually via the HB eligible (and otherwise entirely free) Cloudigs supported housing management system, the registered providers are paid around £20 per tenant per week. That’s over £100k per year, assuming 100 units of accommodation, the local authorities can then fully reclaim the Enhanced Housing Benefit they pay and supported housing providers have fewer problems in claiming Enhanced Housing Benefit, which we do for them anyway. We also provide the lease and management agreement templates for the registered providers and supported housing providers to use. Our costs, which are minimal, are charged to the Enhanced Housing Benefit claim. So what’s not to like?

The Exempt Accommodation Project is happy to take on more local authority approved providers, but we’re especially in need of community-based registered providers that would appreciate a generous revenue stream whilst making a major contribution to solving their local authorities’ subsidy recovery problems.

So whether you’re a supported housing provider struggling with Enhanced Housing Benefit claims, a registered provider looking for a good revenue stream whilst generating huge value for your community or a local authority looking for a subsidy recovery solution, please talk to us. The Exempt Accommodation Project won’t cost you anything, but it will gain you a lot. It’s what you call a “no-brainer”.

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Categories
Finance & Funding Policy

Enhanced Housing Benefit, the Exempt Accommodation Project and the Oversight of Supported Housing

supported housing head image

Introduction

Some months ago, I wrote a briefing on the oversight of supported housing. Since then, much has happened in the supported housing space, including the National Statement of Expectations for Supported Housing and consequential structural changes at local authority level. These changes include more integrated “commissioning” of supported housing, often in conjunction with Revenues and Benefits departments, as local authorities consider how to manage the supported housing “market”.

Enhanced Housing Benefit and the Exempt Accommodation Rules

We have seen additional restrictions on, and greater scrutiny of enhanced Housing Benefit claims made by supported housing providers under the Exempt Accommodation rules.

Back in October 2020 I wrote a briefing on the National Statement of Expectations for Supported Housing in which I expressed concern that it would be used as an exercise in cost control. Unfortunately, those fears seem to be justified in many instances. Some local authorities are trying to insist on supported housing providers becoming registered providers to qualify for framework agreements and tenders in circumstances where, in England at least, this is a very difficult thing to do.

Other local authorities are restricting enhanced Housing Benefit payments to non-registered supported housing providers to artificial local maxima of less than they need and are entitled to. They do this to avoid the subsidy loss they incur when they pay enhanced Housing Benefit to non-registered supported housing providers. This is understandable in a way, but it further reinforces the three-tier system in which a tenant’s entitlement to enhanced Housing Benefit is dependent on the legal identity of their landlord, which is patently bonkers as well as discriminatory:

  • Private supported housing landlord: Local Housing Allowance levels only
  • Nonregistered supported housing provider landlord: reduced levels of enhanced Housing Benefit
  • Registered provider supported housing landlord: full enhanced Housing Benefit

We actually need to get rid of the Exempt Accommodation rules and move to a supported housing rent based on an unrestricted Universal Credit housing component. This should be irrespective of the legal identity of the supported housing provider.

The Exempt Accommodation Project

Whilst we are stuck with the Exempt Accommodation rules, we’ve developed the exempt accommodation project in order to:

  • Stop financial discrimination based on the legal identity of a supported housing landlord
  • Enable local authorities to fully recover the enhanced Housing Benefit they pay
  • Ensure full regulatory compliance through the optional use of the ClouDigs cloud-based supported housing management system (it’s effectively free, so why not?)
  • Ensure that supported housing providers are of good quality and only operate with the consent of local statutory sector partners

The Exempt Accommodation Project works by connecting non-registered supported housing providers that own or lease their properties with smaller, community-based registered providers that then take a legal interest in the properties concerned. This enables the payment of enhanced Housing Benefit, which the local authority can fully recover. We provide all the necessary documentary infrastructure and regulatory compliance systems, and we calculate and secure the enhanced Housing Benefit. It effectively costs nothing as the small costs involved are Housing Benefit eligible.

Exempt Accommodation Project Flowchart

Exempt Accommodation Project Flowchart
Exempt Accommodation Project Flowchart

Please get in touch if you want to be part of the Exempt Accommodation Project, if you’re:

  • a supported housing provider, irrespective of legal identity, looking for enhanced Housing Benefit
  • a registered provider needing an additional revenue stream within a risk-managed structure
  • a local authority wanting a strategic approach to full subsidy recovery on enhanced Housing Benefit payments, and the effective management of the local supported housing market.

The Exempt Accommodation Project will not accommodate supported housing providers that are not welcome by the local authority within which they seek to operate. We conduct extensive due diligence on ALL supported housing providers (and registered providers) asking to be involved in the Exempt Accommodation Project. The first consideration the due diligence process is whether the supported housing provider in particular is “approved” by the local authority.

The Accreditation and Oversight of Supported Housing

It would be much simpler if supported housing providers were accredited by local authorities (not regulated or overseen, more on that in a minute). Why not simply refresh the old Supporting People accreditation framework? This would prevent the ill motivated people who set up poor quality supported housing providers and dubious registered providers as a moneymaking exercise from being able to claim enhanced Housing Benefit. Unaccredited providers should not be eligible to claim enhanced Housing Benefit. Thea Raisebeck’s “Exempt from Responsibility?” Report is an insight into the dangers of unaccredited providers.

The National Statement of Expectations requires local authorities to manage their local supported housing “market”, including supported housing services that they don’t fund, so-called non-commissioned services.

I think we need to clarify what we mean when we talk about “commissioned” and “non-commissioned” services. Both the National Statement of Expectation for Supported Housing and the abuse of the enhanced Housing Benefit system require us to do so.

In my view supported housing services should not be eligible for enhanced Housing Benefit or other funding unless they operate at the behest or with the approval of the local authority and its strategic partners.

Local authorities should actually accredit supported housing providers, whether or not they do so in a formal way. In this sense all enhanced Housing Benefit eligible supported housing services would effectively be “commissioned”. Commissioned with a capital C if they are recipients of local authority or other statutory funding aside from enhanced Housing Benefit and commissioned with a small c if they receive enhanced Housing Benefit only. The point is that the latter, which are erroneously referred to as “non-commissioned services”, should only be paid enhanced Housing Benefit if they operate at the behest of or with the approval of local authorities and are accredited by them. If they do this they should be regarded as commissioned services, albeit commissioned with a small c, as they do not receive local authority funding aside from enhanced Housing Benefit.

Accreditation is not regulation or oversight. It’s acceptance by a local authority that a provider operates strategically relevant supported housing that generates value[1].

As I have mentioned before, there is a multiplicity of regulators in the supported housing space: various national housing association/registered provider regulators, the Charity Commission, the CIC Regulator, the FCA none of which are specialists in supported housing.

For the most part supported housing is not overseen. The National Statement of Expectations doesn’t require local authorities to oversee supported housing, which is just as well as they are neither resourced and consequently skilled to do so.

I continue to argue for an independently developed and implemented supported housing oversight system with national scope and based on Value Generation principles. It should be developed by a university or think tank in consultation with the local authorities and providers but implemented independently. The outcomes it generates through formal oversight of supported housing should be fed back to local authorities and providers to inform funding and commissioning decisions and service improvement strategies.

The supported housing quality assessment system I propose (SHQAS) should be a Value Generation-based system. I defined the three value generation principles before and it’s important also to identify how these principles should be measured:

  1. Outcomes for people: qualitatively measured
  2. Cost benefit: quantitatively measured
  3. Wider social and community benefit: both qualitatively and quantitatively measured

The SHQAS should be funded by the UK and national governments. It shouldn’t cost providers and local authorities anything.

Conclusions

So, if you’re thinking about claiming enhanced Housing Benefit, be mindful of the fact that many local authorities are placing restrictions on the amounts they will pay and to whom.

Blanket approaches at restriction are exercises in cost control, not necessarily strategies to invest in supported housing providers that generate value and to restrict resources to those who don’t.

This means that there are many good supported housing providers, that don’t work with registered providers, that will have their revenue restricted. There are some not so good supported housing providers that work with registered providers (some of which are also questionable) which won’t have their revenue restricted.

The Exempt Accommodation Project is a means of rectifying this problem by matching good supported housing providers, which are “approved” by their local authorities, with good community-based registered providers.

In terms of how a local authority “approves” a supported housing provider I believe it should do so via a local accreditation process. No need to reinvent the wheel here: this is what local authorities used to do in the days of “Supporting People”. Bring out the old Supporting People accreditation framework, dust it down and update it for use today.

I don’t believe that local authorities are resourced or skilled to oversee supported housing, and in any event, we need to separate oversight on the one hand from commissioning and funding on the other. Hence, I have argued that a system for the oversight of supported housing, with national scope, should be developed by an independent agency such as a university or think tank and then implemented by that agency independently of both local authorities and supported housing providers. Clearly, the outcomes of the oversight process, which must be based on Value Generation principles, should be shared with both local authorities and providers to inform commissioning/funding decisions and service outcomes.

Michael Patterson

August 2021

[1] Value Generation is: outcomes for people (who live in supported housing); cost benefit to the public purse & wider social and community benefit.

Categories
Finance & Funding

Intensive Housing Management & Enhanced Housing Benefit

supported housing finance
claiming enhanced housing benefit for supported housding

A List of Routinely Eligible Intensive Housing Management Tasks & Functions

Updated October 2022

Please be mindful that just because a task, activity or function is listed here it doesn’t necessarily mean that a local authority Revenues & Benefits Team will agree to fund it, or even agree that it’s eligible in principle. Different authorities take different views, but what I have listed below are things that are routinely accepted as eligible.

Enhanced Housing Benefit for Intensive Housing Management is a complex area. It’s based on regulation and case law and is subject to change. Landlords seeking Enhanced Housing Benefit to fund Intensive Housing Management services must comply with the Exempt Accommodation rules. The amounts claimed should reflect the reasonable costs of providing eligible services to people who have been genuinely assessed as needing Intensive Housing Management.

Claims for Enhanced Housing Benefit are rightly subject to scrutiny by local authorities, and the level of scrutiny is increasing as a consequence of abuses of the system by some unscrupulous individuals and organisations. The National Statement of Expectation for Supported Housing (England only) encourages local authorities and their strategic partners to ‘manage the supported housing market’. In practical terms this involves ensuring the quality of supported housing providers and controlling Enhanced Housing Benefit costs.

In May 2022 the DWP published “Housing Benefit Guidance for Supported Housing Claims“. This guidance has led to increased levels of srutiny of enhanced Housing Benefit claims and a stricter interpretation of eligibility, such that the emphasis is very much on property-specific tasks and functions.

This revised guidance also needs to be seen in the context of the UKUT hearing Allerdale BC v JD, the summary of which states: “What constitutes “general counselling or..any other support services” within paragraph 1(f) of schedule 1 to the HB Regulations 2006 must be assessed with regard to the legislative history of that provision. There is no automatic linkage between schedule 1(f) and the definition of “exempt accommodation” in the HB and CTB (Consequential Provisions) Regulations 2006.”

If you are seeking Enhanced Housing Benefit for Intensive Housing Management you should be an existing, qualifying supported housing provider. If you are a new supported housing provider you should have established referral pathways and be acting with the specific approval of commissioners.

You might be an excellent supported housing provider that provides excellent services to people with additional needs. This doesn’t guarantee that a local authority will agree to pay you Enhanced Housing Benefit, but we can help you in the construction, submission and negotiation of claims.

Context

Intensive Housing Management that is routinely eligible for Enhanced Housing Benefit is split into two broad areas and includes both staff and non-staff costs:

  • General needs housing management and maintenance functions that are more intensively provided as a consequence of the additional needs of supported housing residents
  • Additional or intensive housing management and maintenance functions and tasks that would not be provided in general needs accommodation where no additional needs exist. Such tasks and functions include but are not limited to:

Intensive Housing Management List

  • The provision of an alarm (even though alarms are not HB eligible) or the Housing Proactive system (which is HB eligible. Please ask us about this)
  • Controlling access to the premises (concierge type services)
  • Ensuring rent is paid regularly and on time.
  • Explaining the occupancy agreement and assisting people to abide by it.
  • Organising inspections of property and arranging for any repairs or improvements to be carried out, including the replacement of furniture.
  • The additional costs of property maintenance and repair, aids and adaptations, housing services, furniture, fittings and equipment
  • Ensuring that people are aware of their rights under their occupancy agreement.
  • Offering advice and guidance on keeping property to a reasonable standard of hygiene.
  • Signposting people to other support providers as required (though this is increasingly seen by some LAs as “support”).
  • Liaising with all relevant agencies, both statutory and voluntary, on the tenant’s behalf to the extent that it concerns their ability to maintain/develop independence in relation to their housing.
  • Assisting people to reduce rent arrears.
  • Dealing with nuisance issues.
  • Ensuring that people know how to use equipment safely.
  • Providing people with advice and facilitating a move to alternative accommodation as required.
  • Assisting people to claim the housing component of Universal Credit and other welfare benefits related to their supported housing.
  • Helping to keep people safe by monitoring visitors, including contractors and professionals, and by carrying out health and safety and risk assessments of property.
  • Internet access within sheltered and supported housing.
  • PPE.

If you do any or all of the above in sheltered and/or supported housing on a “more than minimal” basis and you are an eligible provider (see paragraphs 2 and 6 above) then you should be eligible to claim Enhanced Housing Benefit

If you are a local authority approved supported housing provider and you want advice and assistance in claiming Enhanced Housing Benefit please get in touch.

Categories
Finance & Funding Policy

Working Together to Develop New Supported Housing

Supported Housing

A Bit of Background

One of the issues that has preoccupied me lately is the way in which private and institutional capital has been and is being introduced to the sector to fund supported housing for people with often high levels of additional need.

Let me be clear; I’m very much in favour of this, but it’s important that it’s done properly by investors, commissioners, housing associations and care and support providers.

You’ll probably be familiar with my emphasis on Value Generation principles

  • Outcomes for people
  • Cost benefit to the public purse
  • Wider social and community benefit

It’s important that all parties have a common values base, such as Value Generation, if we are all involved with services for people with additional needs. If supported housing is developed without common values between the parties involved, the people who pay the price of failure are those who live in it and those who work directly with them to do so.

Private Capital for Supported Housing

Supported housing funded through private capital is a relatively immature “market” and the record so far is a patchy one.

Investors are being offered a good deal here if they’ve done their homework, they know they’ll get a safe long-term return on their investment. That return should be measured in single figure ROI percentages, yet commissioners tell me of investors seeking excessive double-digit percentages whilst some “aggregators” walk off with huge commissions.

If the bottom line is all that matters, then you’re dealing with the wrong sector. To the extent that supported housing is “market” it’s a social one, and your social purpose has to underpin your investment. There are some really good socially oriented investors out there and they’re looking for commissioners who need supported housing. There are housing associations that understand what their role should be and providers with the capacity and vision to take on a wider role, for example, direct responsibility for day-to-day and reactive maintenance as well as direct support to residents.

The Role of Housing Associations

Housing associations are a necessary part of the mix here and, in many cases, they don’t actually provide much or any intensive housing management and support to people who live in supported housing (who are their tenants). This is more often done by specialist providers, but not always: some housing associations are also providers in their own right.

There are different types of housing associations. The “REIT” (Real Estate Investment Trust) based housing associations are there to enable local authorities to fully recover from the DWP the enhanced Housing Benefit they claim for supported housing, and to be a regulated presence that should provide comfort to commissioners and others involved in the development of privately funded supported housing.

REIT-based housing associations need to be independent of capital finance providers, not just a vehicle for enhanced revenue. We should be entitled to expect them to manage their finances and conduct their governance in accordance with a social model of operation. They claim significant levels of public funding in the form of enhanced Housing Benefit, which is a personal benefit of their residents. They should make proper provision for the operation of the housing for which they are responsible, including the creation of maintenance sinking funds and other operational costs. They should remunerate their people on the basis of the value they generate within a social market.

The English Social Housing Regulator recently investigated a number of REIT-based housing associations that develop supported housing with the use of private capital and operate on the basis of public revenue (enhanced Housing Benefit). Regulatory judgements were issued on a number of these. Without commenting on specific cases, it seems to me that the Social Housing Regulator may have rightly censured some but did so without publicly identifying whether any individuals involved made significant personal financial gain. To some extent the Regulator may have also thrown the baby out with the bathwater by criticising other REIT-based housing associations that develop and operate very good supported housing and generate significant value.

Community-based or “traditional” housing associations are typically different from REIT-based associations as they’re not primarily vehicles for the introduction of private capital. What I would like to see is a model where these community-based housing associations act to facilitate the introduction of private capital for supported housing and matching enhanced Housing Benefit because they typically have good governance and operational/financial management.

Sometimes community-based housing associations directly manage supported housing, often they conclude Management Agreements with specialist provider agencies to do so. The agency management route is a well-worn path, but not without its own problems. One of the problems with many housing associations is a common failure to provide sufficiently responsive maintenance services. A broken window in a general needs property may not be deemed to be an “urgent” or “emergency” repair, but in supported housing it often exactly that because of the tenants’ additional needs. The provider agency is usually in a better position to deal with responsive maintenance and in my opinion the Management Agreement should allow for this and the maintenance revenue stream should go direct to the provider agency.

Socially oriented private and institutional investors, commissioners and providers in supported housing would very much value being involved with community-based housing associations, which would take a lease on the supported housing properties. Under such an arrangement, community-based housing associations would enable the claiming of enhanced Housing Benefit such that the local authorities that pay it can fully reclaim it from the DWP.

A Management Agreement would still need to be concluded with the provider agency within which the community-based housing association’s role would be minimal: ensuring that occupancy agreements with their tenants are properly administered by the provider agency and ensuring that the physical environment is of an excellent standard without actually doing the day-to-day maintenance, which would be one of the provider’s roles.

The housing association would receive a management and administration fee and possibly an equity share in the properties as well as plaudits from commissioners and others for acting according to a social purpose.

A Call To Action

I’m prompted to write about this having recently been in discussion with social investors and property developers who are looking for community housing associations and provider partners to work with in the development of new supported housing.

I’ve also been asked to help connect providers with people who fund and develop property for use of supported housing.

  • So if you’re a support provider looking for property for supported housing or the capital to develop it
  • A socially oriented property developer/investor looking for a supported housing provider or a community housing association to work with
  • A commissioner who wants to see the development of good quality supported housing in your area
  • Or a community housing association that’s interested in working with a socially oriented property developer/investor to develop supported housing, with or without an agency support provider

Then please get in touch directly with me and I can put you in touch with my wide network of contacts in the provider, housing association, commissioning and investor/developer sectors.

A Few Words of Caution

On a final, if slightly separate matter: if you’re someone who wants me to help you

  • Set up as a housing association/RP
  • Or a supported housing provider using private property in which you have a personal interest
  • Or you want enhanced Housing Benefit for supported housing that you set up without the active support of local commissioners

Then please DON’T contact me.

Please excuse the slightly tetchy tone but it sometimes gets a little tiresome. I publish blog posts and briefings promoting the need for an integrated and social approach to the development of supported housing, and I then get inundated with requests from private individuals whose intentions have much to do with private profit and little or nothing to do with social value.

I have values (see Value Generation above). They’re important to me and to supported housing in general. I work with people who share those values. I don’t work with people who don’t share those values.

Categories
Finance & Funding

Claiming Enhanced Housing Benefit for Intensive Housing Management

Intensive Housing Management

Context

I was recently rereading a Briefing on enhanced Housing Benefit and Intensive Housing Management (also known as enhanced housing management and/or additional housing management), that I wrote in 2010. I was struck by how relevant and important the information in that Briefing remains today.

Enhanced Housing Benefit is payable to providers of most types of supported and sheltered housing, provided they comply with the Exempt Accommodation rules. If you’re not sure whether your organisation qualifies please ask.

Please be aware that we do not non-local authority approved supported housing providers to claim Enhanced Housing Benefit for reasons set out in Thea Raisbeck’s “Exempt From Responsibility?” report. By “local authority approved” I mean supported housing providers that have commissioner consent to operate. Referrals from Homelessness/Housing Options Teams do not constitute commissioner consent in this context.

The reason that Enhanced Housing Benefit is payable is because qualifying supported housing providers provide additional and more intensive housing management and maintenance services than would be the case in general needs rented housing. They do so because supported housing residents have additional housing needs and supported housing itself has additional maintenance and services costs.

What Are Enhanced Housing Benefit & Intensive Housing Management?

There is no definitive list of Intensive Housing Management tasks (but see my blog post here). We have developed one based on the notion that Housing Benefit will fund tasks which are part and parcel of adequate accommodation, bearing in mind the needs of the residents, and provided these tasks are not funded elsewhere.

Many of these tasks routinely constitute much of a Support Worker or a Scheme Manager’s job description. Housing management functions such as lettings, assistance with claiming Housing Benefit to ensure that rent and service charges are paid, controlling access and facilitating and monitoring site visits from contractors and other visitors/professionals, arranging aids and adaptations, health and safety and risk assessments of property, management, administration, delivery and facilitation of housing services provided, the additional maintenance and services costs……I could go on.

If you are a non-profit provider of accommodation and support and the Intensive Housing Management tasks you perform aren’t funded by another revenue stream, then it can be funded by Housing Benefit. Even better, if you’re a registered provider of social housing (RP) and you provide supported or sheltered accommodation, in which you charge Intensive Housing Management as an eligible service charge, the local authority receives full reimbursement from the DWP in subsidy recovery. This means you’re actually bringing in money to the local area.

This subsidy top-up doesn’t fully apply where non-RPs go down this route. 40% of the difference between what you claim and the Rent Officer determination, which will be similar to the relevant Local Housing Allowance, goes onto the Council Tax bill or is picked up within another local authority budget, such as Adult Social Care. In order to provide a solution to subsidy loss to local authorities I set up the Exempt Accommodation Project in June 2021.

Why You Should Consider Enhanced Housing Benefit & Intensive Housing Management

It’s a very attractive proposition for RPs and other non-profit accommodation-based support providers for a variety of reasons.

You get full cost recovery on your housing costs which have often been underfunded for years. OK, RPs have an issue with compliance with the Regulator for Social Housing’s Rent Standard (unless it’s “Specialised Supported Housing”). But that isn’t a problem: Intensive Housing Management costs can be treated as service charge items. You can re-allocate costs and budget headings from rent to housing services where feasible in supported and sheltered housing arrangements.

This enables you to invest in the properties in which people with additional needs live: the physical environment, services and staff. Your support costs can be cheaper because you’ve remodelled your service delivery structure and/or taken some costs out and allocated them (where eligible) to Intensive Housing Management, funded through Housing Benefit. This matters when you bid for support/care contracts because your unit cost for support will be lower without actually reducing your revenue – you’ve just spread the cost.

The Current & Future of Enhanced Housing Benefit & Intensive Housing Management

Having worked with Enhanced Housing Benefit since 2005 you get used to hearing people say, “but it has to end sometime”. Well it hasn’t yet and one of its distinguishing features is its longevity and the fact that case law precedent has established that Intensive Housing Management is eligible for Housing Benefit, having regard to the nature of the accommodation type and personal circumstances of the tenant group.

Over time the Enhanced Housing Benefit pot has grown. Initially, this was directly in response to the retrenchment of “Supporting People”. We advised providers (and not a few local authorities) on reallocating the eligible proportion of their Supporting People revenue loss into Enhanced Housing Benefit. Over time this has become a well-worn path, supported as it is by regulation and case law.

Commissioners/funders will routinely ask supported housing providers looking for funding “have you reallocated your eligible costs into Enhanced Housing Benefit?” because it makes absolutely no sense not to do so.

Providers might want to consider revising service delivery models if this adds value to the lives of people with additional needs. For example, we are often told “well we would provide more services because people need them, but we don’t have the funding”. One of the things we do is to review service models and staff job descriptions in order to introduce Housing Benefit-eligible services such as concierge, access control or night security, for example.

If you’re a qualifying supported or sheltered housing provider (i.e. most social/non-profit providers of supported housing) and you haven’t gone down this route, or you haven’t done so for a while, you really should think about it and get in touch.

Even with the introduction of Universal Credit Enhanced Housing Benefit remains payable in respect of supported housing tenants. This is despite the fact that Housing Benefit was one of the benefits absorbed by Universal Credit and would not otherwise exist. When someone claims Universal Credit, the online application asks the claimant whether they live in supported housing. If they answer “yes” to that question the housing component of their Universal Credit is administered by the LA on an uncapped basis under the Exempt Accommodation rules. This also gives supported housing residents protection from the Benefit Cap, and in some cases from the Spare Room Subsidy/Bedroom Tax.

The “but it has to end sometime” mantra is true of course; it’s just been overly pessimistic for years. It’s likely that the time for change will come when the UK Government finally decides on the funding model for supported housing (in England). Specifically, whether a  transitional arrangement of paying Enhanced Housing Benefit for supported housing via Universal Credit be formalised as a permanent arrangement. The UK Government did eventually commit to keeping the funding of supported housing within the welfare system after all.

Health and social care are devolved functions within the UK, and supported housing would be were it not for the fact that a proportion of its funding, in the form of (Enhanced) Housing Benefit, remains non-devolved. If the UK Government takes a sensible view of supported housing, and not just its funding, it’ll see it as an integrated part of the health and social care system in England going forward. At the point of change, whatever and whenever that is, it may be that Enhanced Housing Benefit will become a component of Universal Credit.

What happens in NI, Scotland and Wales depends on whether those nations have a fully devolved welfare system (easy to see in Scotland) and whether they choose to (part) fund supported housing from within it or choose to put the funding within health and social care commissioning structures.

Why You Should Think About It

Our message is that you should consider now whether you’re properly recovering the costs of providing the supported housing services that your residents need, or whether you should consider reviewing your service delivery model to enhance revenue recovery. Not just the costs of human (staff) services, but the additional costs you incur in maintaining and servicing your supported and sheltered housing.

Supported housing providers are rightly asked to demonstrate the value that they deliver. They should be equally concerned to identify the costs they incur in delivering that value.

The best way to do so is to ask us to audit what you do and to calculate what it that translates into as a full-cost recovery rent structure. If the amounts are more than you currently charge, then please let us negotiate with Housing Benefit colleagues on your behalf to redress the imbalance.

The good news is that it won’t cost you anything if we find that you can’t claim Enhanced Housing Benefit. If we find that you can, and we successfully negotiate an increase, then you pay a small fee (charged to HB) per tenant per week. You only pay this when you’re in receipt of the increased revenue and you pay it over a 12-month period to aid cash flow. If we don’t get you an increase, you don’t pay us anything at all. Contact us.

There is an evident danger in not demonstrating your true costs, or revisiting your service delivery model, whether to appear “reasonable/competitive” to funders or for some other reason.

That danger may manifest itself if we have a funding system change at the point of which supported housing providers’ costs are frozen. If you haven’t optimised your rent and services charges income, the new system may assume you can make do with what you have.

Michael Patterson has worked on Enhanced Housing Benefit, Intensive Housing Management and other things since 2005. Michael writes, publishes and speaks on supported housing and related matters and provides strategic advice a range of supported housing providers and revenue and capital funders.

If you’re interested in Enhanced Housing Benefit please get in touch.

Categories
Finance & Funding

Funding Supported Housing

Funding Supported Housing

Context

This blog post is the third in the “What is Supported Housing?” Series. To summarise so far I have suggested that supported housing:

  • Be defined other than by timescale
  • Is where someone with an additional needs lives, for the duration of that need, irrespective of who the landlord is
  • Should be regulated and overseen (see my next blog post)
  • Should be commissioned, funded and “measured” according to Value Generation principles

The UK Government is working on draft social care legislation for England and devolved governments have yet to integrate supported housing into the health and social care mainstream. Supported housing, not least its funding, should be part of the health and social care mainstream.

Revenue

Supported housing revenue includes local authority and NHS administered funding for social and health care needs, and people’s own personal budgets.

Supporting People funding is now the exception not the rule. A significant amount of the value of the Supporting People budget (originally £1.8 billion) has been reallocated into (enhanced) Housing Benefit as Intensive Housing Management funding. It’s moved from the instability of local authority finances to the relative stability of the welfare benefits system.

The key question when it comes to recurring revenue for supported housing, however is “where will it sit in relation to the welfare benefits system?”. The UK Government gave a “Future of Supported Housing” policy commitment in 2018 to keep the funding of supported housing within the welfare system.

Lord Freud acknowledged in 2012 that people in exempt or specified accommodation would have the housing component of their Universal Credit administered by the local Housing Benefit team under the Exempt Accommodation rules. So effectively, enhanced Housing Benefit for Intensive Housing Management is paid as the housing component of Universal Credit on an uncapped basis.

I believe that this supported housing component of Universal Credit should be redesignated “Supported Housing Rent”, which should be payable to all supported housing providers regardless of legal identity, provided they are properly regulated/accredited and overseen (see my next blog post “The Regulation of Supported Housing”).

Whoever the landlord is, be it social, private, statutory, voluntary charitable; would it not be better for there to be a simple system whereby the costs of the building are met through a banded system to take account of different cost variables? In England these bandings would probably be regionally based. (See the “Lord Best letter” of 2017). The additional (non bricks and mortar) housing needs components can also be banded according to level of assessed need (low, medium or high).

This system has the advantages of reflecting variable levels of additional need and building/property costs whilst at the same time applying sufficient maxima to each band. It dispenses with the need for basing rent levels on wildly inconsistent Local Housing Allowance levels.

Within a Universal Credit claim Supported Housing Rent components would be therefore be awarded based on a banded regional basis to reflect the variable costs of the development and management of property in every and any given region of England, and whilst Universal Credit remains a non-devolved issue this model may also be of interest to NI, Scotland & Wales.

The housing based additional needs component of Supported Housing Rent could be paid at three levels: low medium and high. These are simple principles that allow for variable costs in both buildings and the needs of the people who live in them.

Recipients of Supported Housing Rent (landlords) will have to generate value:

  • outcomes for people
  • cost benefit to the public purse
  • wider community benefit.

They will have to comply with regulatory and oversight standards (see my next blog post). We really should dispense with the absurd and discriminatory notion that peoples’ entitlements to enhanced revenue (in this case Supported Housing Rent) as a consequence of their additional needs should be dependent on the legal identity of their landlord, which is the case now.

Capital

The capital funding of supported housing is a blog post in its own right. However, having given a view on supported housing revenue it seems sensible to make some summary comments on the capital position.

We are moving increasingly in the direction of private capital funded supported housing. This has been especially so in the case of Specialised Supported Housing (what I would refer to as “Intensive Supported Housing”).

There is a need to get the balance right between social motivation and profit. Put a different way, there is a need to be realistic about what percentage return on capital public revenue should be expected to return. Investors should generate value in what they do just as much as providers of supported housing are expected to do.

REITs (Real Estate Investment Trusts), which facilitate much of the investment in supported housing, need to evolve their structures in the light of the English social housing regulator’s judgements against some REIT-based housing associations and the associated trade press reporting.

Conversely, we should consider how well-placed social housing regulators across the UK are to oversee supported housing, a significant amount of which sits outside their sectors. I think there are strong arguments to make for the independent oversight of supported housing, arguments I shall attempt to make in my next blog.

Investment in supported housing is based on a viable revenue stream. This viable revenue stream, with its consequent impetus to investors, should be built into universal credit on a Supported Housing Rent basis.

The UK Government will also continue to deploy public capital (and revenue) in the form of targeted funding for specific outcomes. For example, it has recently announced that it is bringing forward £160m of its Rough Sleeping Services budget to provide 6000 homes with support for street homeless people in England. This is ambitious enough to be a game changer for street homelessness, provided the revenue for support is sufficient and stays in place.

Conclusion

We need to think about the funding of supported housing in the context of its outcomes (see my blog post on defining supported housing) and its regulation/oversight (watch this space!).

Supported housing needs revenue funding certainty for its day to day operation and in order to give investors confidence to invest and providers confidence to provide.

Supported Housing Rent builds revenue and confidence into the system and makes the relationship between needs and resources. It retains revenue for supported housing within the welfare benefits system.

Supported housing providers, “social” or not, should generate value and comply with regulatory/oversight frameworks in order to qualify for Supported Housing Rent.

Categories
Finance & Funding

Funding Intensive Housing Management

supporting supported housing
What is Intensive Housing Management & how is it funded?

Many of you will know what “Intensive Housing Management” is. It’s a term that the old Housing Corporation in England used to describe the additional housing management services that people in supported housing often need. Intensive Housing Management services were funded by the Housing Corporation through a revenue grant known (latterly) as SHMG (Supported Housing Management Grant) some of which was often paid on by RSLs to their specialist agency partners that typically manage the RSL’s supported housing.

The set of prescribed intensive housing management services was defined in hardcopy in the Housing Corporation’s “Guide to Supported Housing”, before the age of the Internet. There is a similar list you can gain access to online here: in Scottish statutory instruments 2002 number 444 with its list of “Prescribed Housing Support Services” in Regulation 3.

The revenue funding streams for intensive housing management were put into the Supporting People pot in 2003, to help fund what became known as “Housing Related Support”. And that, you might think, was the end of that.

Except that it wasn’t. Supporting People begin to retrench very quickly. In 2005 Michael Patterson and Danny Key teamed up to identify and promote a regulatory means of mitigating providers’ losses of Supporting People revenue, by claiming the cost of eligible Intensive Housing Management tasks from Housing Benefit. This involves the use of the Exempt Accommodation route to enhanced levels of Housing Benefit. 

Over time this led to a substantial number of eligible providers (housing associations and voluntary agencies namely) being able to claim enhanced levels of Housing Benefit for the costs of the eligible housing management tasks Supporting People no longer funded.

Michael Patterson renamed these eligible housing management tasks as “Intensive Housing Management”, a term which has returned to the language of supported housing, bringing with it a substantial pot of revenue known as enhanced Housing Benefit, which continues to exist to this day.

We are cautious who we work with, especially given the large numbers of new, unregulated supported housing services being set up. As someone with a values base I commend the “Exempt From Responsibility?” report written by Thea Raisbeck in November 2019 for Spring/Commonweal Housing, which identifies problems over the lack of regulation of supported housing, and the oversight of the system through which some landlords claimed enhanced Housing Benefit. To put it more bluntly: some unregulated supported housing providers are claiming Housing Benefit but apparently not providing adequate housing or intensive housing management services.

Not all supported housing providers are eligible for intensive housing management funding, but most social supported housing providers are. Rather than go through the criteria for Exempt Accommodation compliance here (but watch this space) just ask yourself these questions:

  • Are you a genuinely social organisation? (For the purposes of enhanced Housing Benefit this means nonprofit)
  • Do you generate value?
    • Outcomes for people
    • Cost-benefit
    • Wider social benefit (Community Sustainment)
  • Do you own or manage supported housing?.

If you can say yes to the above questions you’re likely to be eligible to claim Intensive Housing Management and Maintenance funding. It’s a complex process that requires you (or me on your behalf on a ‘no increase, no fee’ basis) to audit your supported housing and provide a properly optimised rent structure that can be used to support an enhanced Housing Benefit claim.

If you represent a social supported housing provider and you’d like to discuss claiming enhanced Housing Benefit, please contact me.

It’s also important to consider the likely future funding of Intensive Housing Management and Maintenance, and supported housing in general for that matter. I’ll keep the wider context for a future blog post/briefing but what about the Intensive Housing Management components of supported housing revenue, currently paid as enhanced Housing Benefit?

We should bear in mind both the implementation of Universal Credit and the UK Government’s (stalled) “future funding of supported housing” policy agenda.

Universal Credit allows supported housing claimants to have the housing component of their Universal Credit paid by local Housing Benefit teams as enhanced Housing Benefit. The future funding of supported housing policy agenda originally intended to pass supported housing revenue, of which Intensive Housing Management funding is a substantial part, to local authorities but that idea was parked.

Nothing much has happened on the supported housing policy agenda due to the UK Government’s preoccupation with Brexit and the current Covid 19 pandemic. But the UK Government is working on a Social Care Bill, and they would be remiss to omit supported housing from it.

It seems opportune therefore to remind the UK Government and the wider sector that Intensive Housing Management funding needs to stay exactly where it is now – as a flexible component of Universal Credit.

Going back to the “Exempt From Responsibility?” report, and my own briefings going back some years, it’s not just about the future funding of supported housing, important though that is. It’s also about supported housing regulation, it’s about how we define supported housing and it’s about what values base we apply to supported housing.

I’ll be publishing more blog posts and briefings in future you can see and follow my blog site (supportedhousing.blog) Please also follow me on Twitter at @MPattersonLtd