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The Exempt Accommodation Project

Background

We have recently been contacted by a number of non-registered supported housing providers (i.e supported housing providers that are not registered providers/housing associations) who tell us that their local authorities require them to become registered providers of social housing in order to be able to be included on the local framework agreements and in order to qualify for Enhanced Housing Benefit.

We are also aware, as per my recent blog post, that some local authorities are restricting Enhanced Housing Benefit payments to non-registered providers to levels well below those paid to registered providers. This is because local authorities can only fully reclaim from the DWP the Enhanced Housing Benefit they pay to registered providers.

Add to that the fact that private-sector providers have never been entitled to Enhanced Housing Benefit and what we have is a three-tier system in which:

  • Tenants of registered provider supported housing can receive full Enhanced Housing Benefit entitlements
  • Tenants of nonregistered supported housing providers receive partial Enhanced Housing Benefit entitlements
  • Tenants of private sector supported housing providers receive no Enhanced Housing Benefit at all

It simply wrong and discriminatory that tenants’ entitlements to Enhanced Housing Benefit, which is a personal benefit, are dependent on the legal identity of their landlord.

The Exempt Accommodation Project

The Exempt Accommodation Project is a way of helping local authorities to properly fund supported housing via Intensive Housing Management/Enhanced Housing Benefit without losing subsidy and without requiring non-registered providers to register as registered providers (housing associations).

The Exempt Accommodation Project is, of necessity, a means of tinkering with the existing system, which is based on the exempt accommodation rules. However, the UK government, having already said that supported housing will continue to be funded through the welfare system, should make the housing component of Universal Credit unrestricted for supported housing so that the true cost of supported housing can be met through a “Supported Housing Rent“. This should be payable to all supported housing providers, irrespective of their legal identity, provided they generate value[1] however, the wheels of state turn slowly so until that happens, we have the Exempt Accommodation Project.

How does the Exempt Accommodation Project work?

The Exempt Accommodation Project seeks to match nonregistered supported housing providers 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.

  • The registered provider is paid (via the Enhanced Housing Benefit claim) for what it does, which will vary depending on what, if anything, the supported housing provider needs. This is likely to appeal to smaller, community-based registered providers for whom the additional income could be a game-changer.
  • The supported housing provider is also paid for what it does via the same Enhanced Housing Benefit claim, which will be more secure because the local authority can recover it from the DWP.
  • The regulatory/oversight functions are managed via a bespoke cloud-based supported housing management system (ClouDigs) that is housing benefit eligible, so it costs nothing and generates huge value
  • Maintenance can be subcontracted to a specialist supported housing maintenance provider, or the registered provider can do it, depending on what works best for the supported housing provider.
  • We provide the necessary leases/subleases and management agreements
  • We calculate and negotiate the revised Enhanced Housing Benefit claims.
  • It won’t cost you anything except a small setup fee, which will be a fraction of the financial benefit that will accrue to you, and which is fully recoverable from Enhanced Housing Benefit in any case..

Supported housing providers and registered providers can choose who they work with and what components of the Exempt Accommodation Project structure they need. They may or may not need maintenance services, may or may not need the bespoke supported housing management system (but why not? It’s incredibly good and effectively free of charge).

Supported housing providers and registered providers that want to get involved will need to show that they generate value. They will need to show that they operate through recognised referral pathways as far as the local authorities are concerned. The Exempt Accommodation Project is not an invitation to dubiously motivated opportunists to access Enhanced Housing Benefit. It is an opportunity for genuine supported housing providers and registered providers to operate with the financial and strategic approval of local authorities and to enable those local authorities to fully recover the Enhanced Housing Benefit they pay.

We are setting up a database of providers and registered providers in order to match one with the other. Matching may initially be done on the basis of geography; however, this may be less important than “cultural fit”. For example, some registered providers may prefer to work with non-profit supported housing providers. Others may be comfortable with private sector supported housing providers. Irrespective of legal identity supported housing providers must generate value, as must the registered providers.

It’s then up to the supported housing provider and registered provider to agree who does what and how the revenue is split. This is a discussion we can facilitate if that’s helpful. The split of roles can vary. Many supported housing providers that own or lease their property will want the registered provider to have a “light touch/arms-length” role. Others will want a greater level of registered provider involvement and the revenue would be split accordingly.


[1] Value Generation has 3 components: outcomes for people; cost benefit to the public purse & wider social and community benefit

Exempt Accommodation Project Flowchart

We have a management agreement template that can be adjusted to reflect the parties’ respective roles and the split of revenue.

We have lease and sublease models that can be used to enable the registered provider to take a 5–7-year leasehold interest in the supported housing providers’ properties with mutual break clauses.

We have a bespoke cloud-based supported housing management system (developed by a supported housing provider) that enables the registered provider to fulfil its regulatory oversight responsibilities and enables the supported housing provider to manage its housing and support roles. This costs just a few pence per week per occupied bed space and is Housing Benefit eligible.

ClouDigs Supported Housing Management System

We have links to specialist supported housing maintenance provider so maintenance can be organised and paid for by the supported housing provider on a “true costs” basis. Alternatively, the supported housing provider can use the registered provider’s maintenance service if it has one or organise its own maintenance.

Management agreement relationships where the registered provider owns the property can be quite unequal. The Exempt Accommodation Project is intended for supported housing providers that own or lease their own property to work with registered providers on a more equal basis.

The Exempt Accommodation Project can also be a way of putting together registered providers and supported housing providers who want to discuss wider strategic partnerships and/or mergers. We have had contact from a registered provider in the north-east seeking this, and a supported housing provider in the West Midlands with the same idea.

As well as facilitating the entire structure of the of these arrangements (introductions, agreements, supported housing management system, maintenance options) we also revise the Enhanced Housing Benefit claims to take account of the (small) costs involved.

This idea generates huge value for local authorities, registered providers, supported housing providers and for residents of supported housing.

Getting Involved

Please get in touch if:

  • You’re a supported housing provider that needs secure Enhanced Housing Benefit revenue and eligibility to be included on local authority framework agreements, or you’ve been told to register as a registered provider
  • A registered provider that needs additional income or is interested in partnerships or mergers with supported housing providers
  • A local authority that’s looking to manage the local supported housing market in such a way as to generate value without loss of Housing Benefit subsidy

We already have a growing list of supported housing providers and registered providers on the Exempt Accommodation Project database. Please become part of this.

Michael Patterson

June 2021

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Why are some local authorities restricting enhanced Housing Benefit payments to charities & voluntary agency supported housing providers and/or forcing them to apply to become registered providers?

Introduction

Some months ago, I published a briefing on the National Statement of Expectations for Supported Housing and predicted, amongst other things, that it might tempt some local authorities to try and restrict the amounts of Enhanced Housing Benefit payable to supported housing providers, and also to try and limit the number of supported housing providers setting up new services.

In respect of the latter point it certainly the case that local authority should commission[1] supported housing that reflects well researched local priorities, and consequently not commission supported housing that doesn’t do so. In addition, local authorities should not commission supported housing that doesn’t generate value[2]. There are too many wrongly motivated people trying to make a quick buck from public money, and we need to see the back of them.

New Developments

In respect of the former point (i.e. restricting Enhanced Housing Benefit) we are beginning to see disappointing examples of some local authorities imposing blanket restricted Enhanced Housing Benefit levels on non-registered provider supported housing (i.e., voluntary organisations and charities). This has nothing to do with matching resources to needs. It’s just crude cost control being exercised at the expense of supported housing and the people it houses and supports. It means that people in non-registered provider supported housing will suffer lower levels of staffing, services and maintenance whilst people with the same additional needs in registered provider owned supported housing generally won’t. This is an iniquitous situation in which peoples’ entitlements to proper levels of service depend on the legal identity of their landlord, which is absurd. This situation must and will be challenged.

The reason that some local authorities are doing this is because they can only fully recover from the Department of Work and Pensions, the Enhanced Housing Benefit they pay when the landlord is a registered provider[3]. However, that is not a justification for discriminating against supported housing providers and residents simply because their landlord isn’t a registered provider.

We have seen other examples where local authorities insist that non-registered provider supported housing providers must apply to become registered providers as a condition of being eligible to be commissioned as local supported housing providers via framework agreements and other mechanisms.

This is for the same reason as that which “justifies” the blanket implementation at local level of restricted Enhanced Housing Benefit payments at well below the amounts paid to registered provider supported housing providers. Some local authorities don’t want to lose subsidy on non-registered provider supported housing providers no matter how much value those providers generate and no matter how important their services are.

There may be good reasons for some supported housing providers to apply to the Regulator for registration but enabling a local authority to fully recover Enhanced Housing Benefit subsidy isn’t one of them. I assume that the various UK housing regulators (Housing Benefit being a non-devolved issue) will have a view on this? The English Regulator of Social Housing in particular is currently very cautious about applications for registered provider status from supported housing providers. Did English local authorities talk to the Regulator of Social Housing before putting in place these requirements for registration as a condition of being commissioned locally?

I do understand that local authorities don’t want to lose subsidy as a consequence of regulations that treat different supported housing providers differently depending on whether or not they are registered providers. I don’t understand why those local authorities would choose to reinforce that difference by imposing blanket artificial Enhanced Housing Benefit maxima on non-registered providers and/or insist that such providers become registered providers. This is a myopic exercise in cost control that does nothing to support the development of good quality supported housing and does much to prejudice it.

A Solution

We actually need a wholesale redesign of the system for funding supported housing (see my blog post on this from 2020: https://supportedhousing.blog/2020/06/03/funding-supported-housing) but the wheels of state turn slowly and until we get structural change we need to tinker with the existing system. There is a shorter-term solution to this problem that would enable local authorities to recover the Enhanced Housing Benefit they pay in full without trying to force providers down the road of registration or restricting providers to unsatisfactory local Enhanced Housing Benefit maxima. Notwithstanding the fact that the Regulator of Social Housing is likely to rebuff applications for registration made purely on the basis that local authorities need to fully recover Enhanced Housing Benefit.

Please see The Exempt Accommodation Project homepage for more information about the solutions to this problem, then read on below.

Non-registered provider supported housing providers that own or lease their properties should consider leasing such properties to willing registered providers. Typical registered provider/agency relationships are based on arrangements where the registered provider owns the properties and the Management Agreement between the parties reflects that. However, where the provider agency has the legal interest in the property (it owns it or holds the head lease) the Management Agreement should reflect this fact. The Registered provider’s role here is to facilitate the ability of local authorities to fully recover the Enhanced Housing Benefit they pay, to ensure the properties concerned are up to the standards expected by the Regulator and to ensure that occupancy agreements are properly administered.

Aside from that, the provider agency can do everything else, including setting the rents and providing the maintenance services. It might want to subcontract maintenance, for example, to the registered provider on an “actual costs” basis but it shouldn’t have to, especially if it has previously maintained its own buildings.

The registered provider in such an arrangement would be paid an admin fee (say £20-£25) per tenant/licensee per week, which is claimable via Enhanced Housing Benefit. This might not be of interest to larger registered providers that have bigger fish to fry (although it might be). What I have in mind are smaller, community-based registered providers that would benefit from what could be quite significant levels of additional revenue. If a non-registered provider leased 50 units of supported housing to a registered provider with an admin fee of £25 per unit per week, that equates to £65,000 per year.

Please get in touch

So, this blog post is an appeal to non-registered providers and community-based registered providers to think about this. We have developed a lease model and a Management Agreement model to reflect these arrangements, so no one is going to have to reinvent the wheel. Furthermore, we can handle the revised Enhanced Housing Benefit claims to include the admin fee.

We have plenty of non-registered provider supported housing providers looking for willing registered providers, although we would happily talk to more. What we don’t have are the willing registered providers in sufficient numbers and locations so we are especially interested in hearing from registered providers who may have an interest in this, as well as providers looking for registered provider partners: michael@michaelpatterson.co.uk.


[1] To “commission” a supported housing service doesn’t necessarily mean to fund it as well in this context. It means to approve and/or recognise it as meeting assessed local need.

[2] Value Generation has 3 principles: outcomes for people; cost benefit & wider social/community benefit.

[3] If the landlord is not a registered provider (i.e. a voluntary agency or a charity) the local authority can only recover 60% of the difference between the appropriate Local Housing Allowance rate & the actual rent being charged.