Categories
Policy

The Exempt Accommodation Inquiry Report

Introduction and Background

On 27th October we finally saw the long-awaited Exempt Accommodation Inquiry Report. The purpose of this briefing is to summarise it and the wider context of Exempt Accommodation in general.

My name is commonly associated with Exempt Accommodation as one of a few people who identified it, and Enhanced Housing Benefit, as a means for supported housing providers to offset some of their revenue loss from the retrenchment of the Supporting People initiative from 2005 onwards.

The Exempt Accommodation Inquiry Report states “we would describe the system of Exempt Accommodation as a complete mess”. Those of you who read my blog posts and briefings will know how strongly I feel about people and organisations who use the Exempt Accommodation system for personal gain, some of whom do so on an industrial scale.

Work that I and others have done on Exempt Accommodation and Enhanced Housing Benefit has led to the creation of a revenue stream for supported housing of around £1 billion a year, in the absence of any meaningful alternative revenue stream for supported housing.

The term “Intensive Housing Management”, which is what Enhanced Housing Benefit funds for Exempt Accommodation providers to provide eligible services, exists because I identified and reintroduced that term in 2005 to describe the tasks and functions Enhanced Housing Benefit funds.

The problem is that greedy, unprincipled, money grabbing people have taken it upon themselves to abuse people with additional needs for their own financial gain. In some cases, making millions of pounds every year off the backs of people they’re supposed to be accommodating and supporting.

Since I and others began raising concerns about the situation some years ago, we have seen developments such as the National Statement of Expectations for Supported Housing, the Exempt Accommodation pilots and related things such as the May 2022 DWP Guidance for the Administration of Housing Benefit claims for supported housing as well as the Exempt Accommodation Inquiry itself.

I have strongly advocated a values-based approach to the management of the supported housing ecosystem, including accreditation of supported housing providers at local level and an independent oversight system.

General Observations

I’m pleased to say some of what I advocate in this regard has been acknowledged in the Exempt Accommodation Inquiry Report including the language I have used to describe Exempt Accommodation abuse such as the “wild west gold rush“. This particular soundbite also seems to have been adopted by Bob Blackman MP, a member of the DLUHC Inquiry Committee and the sponsor of the recently published “Supported Housing (Regulatory Oversight) Bill” currently heading for its second reading in Parliament. However, the Exempt Accommodation Inquiry Report, whilst justifiably angry, is a somewhat patchy and in places a disappointingly unhelpful response.

Detail on the Supported Housing (Regulatory Oversight) Bill is currently sparse, but I assume that its content will reflect that of the Exempt Accommodation Inquiry Report. If it does, it will cause me similar concern to that raised by my reading of the Report, which follows below. We have the opportunity to deal with the unfit for purpose Exempt Accommodation Rules and the dubious people who abuse them and the people they’re supposed to accommodate and support. My reading of the Report does not give me confidence that we’re on the right track here.

My own view is that the Exempt Accommodation rules should be abolished. They have been used for the obverse of which they were intended, which was (ironically) to prevent abuse of the Housing Benefit system. For the past 10 years people in supported housing (except private sector supported housing) have had the housing component of their Universal Credit administered as Housing Benefit under the Exempt Accommodation rules, meaning that it is effectively uncapped. Why don’t we formalise that arrangement so the tenants of locally accredited supported housing providers of any legal identity can claim what I have previously referred to as “Supported Housing Rent“?

We need radical, uncomplicated, structural change to rid the supported housing ecosystem of the thieves and abusers that infest it in the guise of supported housing providers, and in some cases registered providers. But the Exempt Accommodation Inquiry Report doesn’t go nearly far enough to achieve this.

I still don’t think that the Exempt Accommodation Inquiry has quite grasped the fact that most (socially managed) supported housing is actually Exempt Accommodation, and that Exempt Accommodation isn’t just a potentially dubious subtype of supported housing. If the Inquiry had taken this wider view of Exempt Accommodation, maybe it would have come up with a more comprehensive prescription for structural change in the funding of supported housing.

The Exempt Accommodation Inquiry Report’s focus on “regulation” is unfortunate. I have been saying for a long time that the issue is not one of regulation, it’s one of accreditation and oversight. I note the Report does now use the term “oversight”, but unfortunately not of the services supported housing providers provide. The emphasis seems to be more on “regulatory oversight” of the supported housing providers themselves.

The Exempt Accommodation Inquiry Report comments on the variable “quality of Exempt Accommodation” and refers to the National Statement of Expectations as a framework to focus on the housing element of Exempt Accommodation. It rightly emphasises the need for there to be recognised referral pathways into Exempt Accommodation.

Any of you involved in Exempt Accommodation on the ground will know that many local authorities already place significant emphasis on referral pathways into Exempt Accommodation as part of their efforts to manage their supported housing ecosystems.

The Exempt Accommodation Inquiry Report also calls for a clear definition of “care, support and supervision” the provision of which on a “more than minimal basis” is a requirement of Exempt Accommodation compliance. It recommends a set of national standards for “referrals, support and accommodation” should be enforced by local authorities. It recommends that the UK Government should, within 12 months, publish national standards on:

  • Referrals processes
  • Care support and supervision
  • Housing quality
  • Information supported housing providers should give to residents

And that new funding should be given to local authorities to implement these.

Domestic Violence and Abuse.

On the issue of domestic abuse, the Exempt Accommodation Inquiry Report is more reassuring. I’m very aware of the fact that there is a proliferation of organisations offering housing to victims of domestic violence and abuse whilst having no specialist experience in this area.

This isn’t helped by local authorities routinely referring such people to non-specialist supported housing via their statutory homelessness obligations.

The Exempt Accommodation Inquiry Report rightly recommends that Enhanced Housing Benefit, in this context, should only be paid to supported housing/refuge providers that “meet the standards in Part 4 of the Domestic Abuse Act 2021” and that there should be an increased supply of such “relevant specialist services”.

Regulation and Oversight

My view has always been and remains that supported housing providers should be accredited (or not as the case may be) by local authorities exactly as they were under the Supporting People initiative, and that their services should be overseen by an independent agency using the three Value Generation principles.[1]

Unfortunately, the Exempt Accommodation Inquiry Report’s recommendations in respect to regulation and oversight is something of a dog’s breakfast. The report acknowledges, as I have consistently maintained, there are several regulators in the supported housing ecosystem, none of which has “complete oversight of the different elements of Exempt Accommodation”. It also observes that some supported housing providers are not regulated. It recommends the creation of “National Oversight Committee” to address the oversight of supported housing providers (but not the services they provide.) This committee should apparently be comprised of “existing regulators” (presumably the Regulator for Social Housing, Charity Commission and the CIC Regulator) which the Report describes as being “expert in their own areas”.

To be honest I do not believe that any of these regulators are remotely “expert” in supported housing in general or Exempt Accommodation in particular. My experience of the RSH, for example, is that it has never understood supported housing and that it tends to treat supported housing a “bolt on” to mainstream social housing. Its attempts to try and force rent structures for supported housing into the unviable “low-cost social housing” model as per section 69 of the Housing and Regeneration Act 2008 is an illustration of this.

I reiterate that accreditation at local level would be a much stronger and more effective solution. We already have the Supporting People accreditation frameworks which could be refreshed and reused for this purpose. A “National Oversight Committee” on the terms suggested by the Exempt Accommodation Inquiry Report would add to the “complete mess” the Report identifies. The supported housing sector doesn’t need more regulation: it needs accreditation at local level and oversight on an independent basis.

What is perhaps even more alarming is the recommendation that supported housing providers should have to register as registered providers and its blithe dismissal of the fact that the Regulator for Social Housing has deliberately made it increasingly difficult for supported housing providers to register. The report states that “registration should not be unnecessarily onerous or expensive, and if it is that should change”.

Trying to register supported housing providers with the RSH is akin to trying to stuff a camel through the eye of a needle, and if it were a straightforward process we would end up with a situation where supported housing providers are forced to register with a regulator that doesn’t want them and doesn’t understand them. Furthermore, why should it be the case that, for example, supported housing provider charities and CICs, which are already regulated, are forced into the regulatory purview of another regulator? Private sector supported housing providers, some of which are very good, may simply cease to operate rather than be forced to register with the RSH.

A solution to this problem can be seen in the Exempt Accommodation Project, which brokers relationships between supported housing providers and community-based registered providers wherein the registered providers take leasehold interests in the supported housing providers’ properties, thus becoming the landlord.

This is a far simpler solution than trying to force supported housing providers to register as registered providers, and it does comply with the spirit of the Exempt Accommodation Inquiry Report’s rather misguided approach to this issue without making the mistakes of that approach.

The Exempt Accommodation Project needs more community based registered providers to get involved with us to work with supported housing providers. Please get in touch with me for more information about this.

Lease-Based Models

The Exempt Accommodation Inquiry Report accepts that leased-based models similar to that used by the Exempt Accommodation Project are a necessary part of the supported housing ecosystem. It does, however, object to this model on a “for-profit” basis.

I absolutely understand the need to stamp out excessive profiteering through lease-based supported housing models, but the approach of the Exempt Accommodation Inquiry Report, which wants to “prohibit lease-based profit-making schemes from being set up” is frankly silly.

We definitely need to sort out the lease-based sheep from the goats, but the Exempt Accommodation Inquiry Report recommendations will also throw the baby out with the bathwater. There is a world of difference between the approach taken by excellent lease-based models used by social impact investors that look to establish high quality, transparently costed supported housing with an annual return in the region of 5-6% on the one hand, compared to others that grossly inflate the capital costs involved and then look for excessive percentage returns on their artificially inflated capital sum.

Supported housing absolutely needs private capital investment with acceptable rates of return for social impact investors. Is the UK Government about to announce large-scale public capital investment in supported housing? I doubt it somehow, and I think that the language used in this regard by the Exempt Accommodation Inquiry Report is positively dangerous for essential private capital social impact investment in supported housing that must rely on a reasonable profit-making lease-based model.

Funding

The Exempt Accommodation Inquiry Report recommends that the UK Government, not for the first time, should “conduct a review of Housing Benefit claims to determine how much is being spent on what”.

It also says that “rent should be capped at a reasonable level to meet the higher costs of managing Exempt Accommodation”, a principle that I have proposed as part of my “Supported Housing Rent” proposition.

It is imperative in this context that local authorities resist the temptation to apply a cost control approach when establishing what a “reasonable level” is. A reasonable level is the actual cost of providing good quality supported housing on a transparent, open book basis, that the Exempt Accommodation Inquiry Report wants to see.

The Exempt Accommodation Inquiry Report states that “funding for support should be provided separately”. It doesn’t say how. Since the demise of Supporting People, “support” has hardly been funded at all. Whilst Enhanced Housing Benefit doesn’t fund “support”, the last few years, and especially since the DWP guidance of May this year, have seen an increasing pressure on the part of local authorities to restrict Enhanced Housing Benefit funding to strictly directly property-related tasks and functions. Please see the Supported Housing Blog for a list of routinely eligible Enhanced Housing Benefit tasks and functions.

It’s all very well for the UK Government to say that “funding for support should be provided separately”, but where is this funding?

The Exempt Accommodation Inquiry Report also states that “the Government should also consider how to give councils greater control over rents for Exempt Accommodation to ensure value for money”. The DWP guidance mentioned above does do this to a certain extent, but a much more effective response would be to abolish the Exempt Accommodation Rules, as I’ve previously argued, replace Enhanced Housing Benefit with Supported Housing Rent, which should have reasonable local maxima and have a locally administered accreditation system for supported housing providers without which supported housing rent cannot be paid.

Planning

The Exempt Accommodation Inquiry Report recommends that all supported housing, irrespective of the number of people living in a particular scheme, should be subject to HMO licensing. This includes properties where the landlord is a registered provider.

This will have a detrimental impact on many existing supported housing schemes which may have to be reconfigured in order to comply. Any loss of capacity (i.e. room numbers) as a consequence will lead to a corresponding loss of revenue that may render it unviable. In addition, who is going to pay for the necessary work?

Many local authorities are currently rolling out selective licensing schemes for supported housing within which there should be mechanisms for ensuring health and safety within such supported housing schemes that do not currently require an HMO licence.

Blanket enforcement of HMO regulations is at best a crude instrument. HMO regulations are right and proper within the properties to which they were originally meant to apply. Applying them wholesale to the entirety of our supported housing stock will cause significant expense, potential loss of revenue on a permanent basis, unviability and, in some cases, will create an unnecessarily institutional environment in smaller supported housing schemes.

Conclusions

There is a saying that “hard cases make bad law” and I believe, unfortunately, that this is what we’re seeing here. With some exceptions, notably on domestic violence and abuse services, this Report is a missed opportunity based on an inadequate grasp of the supported housing ecosystem that it wishes to reform.

The preoccupation with “regulation” as opposed to local accreditation of supported housing providers and independent oversight of their services skews the focus and conclusions of the Report. Furthermore, the idea that the Regulator for Social Housing and the Charity Commission, for example, should be responsible for the “regulatory oversight” of supported housing providers and the development of national policy in this regard is akin to suggesting that the Football Association should oversee rugby clubs. Supported housing, in my opinion, does not need more regulation, especially from agencies that don’t fully understand it. It is, however, in desperate need of organisational accreditation and service delivery oversight systems.

The recommendation that no further “for profit leased-based” supported housing should be developed is a crude response to an undoubted problem. It would certainly get shot of dodgy developers after a fast buck, but it would also prevent good quality social impact investors from providing much needed (and inexpensive) private capital for supported housing in circumstances where public capital is scarce indeed and the need for supported housing is increasing, not decreasing.

Similarly, the insistence that all supported housing providers should register with the RSH and also be subject to HMO regulations is an impractical, kneejerk response that will cause huge problems.

We don’t need to reinvent the wheel here. The solution to the abuse of the Exempt Accommodation rules is to abolish those rules, reintroduce the organisational accreditation process to which supported housing providers were subject under Supporting People, introduce an independent (of local authorities and providers) service oversight system based on Value Generation principles, and pay Supported Housing Rent to accredited providers instead of enhanced Housing Benefit, which should be abolished along with the Exempt Accommodation rules.


[1] Outcomes for people (measured qualitatively), cost benefit to the public purse (measured quantitively) wider social and community benefit (measured qualitatively and quantitively).

Categories
Finance & Funding

The Consultation on Rent Capping & Enhanced Housing Benefit

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
Policy

The Problems with Exempt Accommodation

Background

Back in 2005 the primary revenue funding stream for supported housing was “Supporting People funding”, a £1.8 billion UK wide funding pot that had been rolled out two years earlier but was already retrenching markedly. Supported housing providers were struggling to cope with revenue reductions after having been encouraged to grow their services by the government of the day, which then immediately set about restricting the Supporting People revenue upon which those schemes depended.

It was at that time that I and a few others identified a means of offsetting some of that revenue loss. We identified the existence of the Exempt Accommodation rules, an arcane set of regulations that entitled agencies that complied with them to claim enhanced levels of Housing Benefit for providing certain housing related services to people with additional needs. I reinvented the term “intensive housing management” to describe those services and set about promoting the Exempt Accommodation rules, enhanced Housing Benefit, and intensive housing management to the supported housing sector. Over 15 years later, enhanced Housing Benefit has become the primary funding stream for supported housing totalling around £1 billion per year.

Problems?

I hope you’ll forgive me for taking pride in having been instrumental in creating that £1 billion revenue pot. However, in addition to a sense of pride I also have a sense of intense anger at the fact that the Exempt Accommodation rules have been roundly abused by organisations and individuals that have made massive amounts of money, and still do, through the wholesale financial abuse of people with additional needs.

Housing Benefit, whether enhanced or not, is a personal benefit. This personal benefit is being diverted into the pockets of dubiously motivated people on an industrial scale.

To qualify your tenants for enhanced Housing Benefit you must be an “exempt landlord”: put simply; a “housing association”, a charity or voluntary organisation.

The Exempt Accommodation rules were devised in 1996 to prevent ill motivated private landlords from robbing the Housing Benefit system by providing poor quality bed-and-breakfast accommodation to homeless people and charging the local authority a fortune for it. The government of the day introduced the Exempt Accommodation rules to restrict private landlords to Local Reference Rent levels (now known as Local Housing Allowance). Certain landlords, identified above, were exempt from those rent levels, so exempt landlords could claim enhanced levels of Housing Benefit.

What has happened since enhanced Housing Benefit became a major revenue stream is that certain individuals have abused the system by setting up allegedly exempt landlord structures, which are nothing more than badly motivated private businesses masquerading as exempt accommodation compliant supported housing providers.

These businesses are exploiting the Exempt Accommodation rules to use them for the very opposite purpose for which they were intended, which was to prevent, not enable, the abuse of peoples’ Housing Benefit entitlements.

But it’s not just dubious supported housing providers, which milk the system and provide poor quality accommodation and minimal or non-existent services that are the problem. Commercial greed has affected the entire supported housing ecosystem.

Private Capital

Don’t get me wrong here; I absolutely believe that private capital is essential for the development of new supported housing schemes. Whether you fund supported housing, commission supported housing, deliver it, or measure its quality you need to do so according to a set of principles. A few years ago, I devised “Value Generation” as this set of principles:

  • Outcomes for people (qualitatively measured)
  • Cost benefit to the public purse (quantitatively measured)
  • Wider social and community benefit (qualitatively and quantitatively measured)

So, if you don’t generate value you shouldn’t be involved in supported housing.

Just as many supported housing providers do a brilliant job for people with additional needs, some private capital providers do the same thing. To get an idea of what I mean you could do worse than to book onto our free virtual supported housing conference 2022. One of the sessions will be led by Assetz Exchange, which acquires and leases property for supported housing and whose investors can expect a yield of in the region of 5%, which is entirely reasonable and is an exercise in Value Generation.

By comparison, I’m aware of other private capital providers who think that 9%, 10%, 12% or 15% yields are reasonable and some of which would think nothing of using dubious valuation methodologies as a means of inflating the property lease cost for enhanced Housing Benefit claim purposes. Often the only value being generated in such examples is financial value to investors and shareholders at the expense of services for people with additional needs, who are supposed to be the point of and the priority for supported housing.

The Invasion of the Supported Housing Ecosystem & the Response to it

Many of the money motivated private capital providers have made common cause with equally money motivated registered providers, which in turn work with supported housing provider agencies that take on the identity of CICs and other allegedly non-profit structures.

This has led to an invasion of the supported housing ecosystem by people and organisations who know how to play the system for financial gain.

This influx of the uninvited has led to significant pressure on local authorities and enhanced Housing Benefit. Alleged supported housing providers, whether connected to dubiously motivated private capital or not, have popped up all over the place, usually in the form of a CIC, and demanded enhanced Housing Benefit for alleged supported housing services that no one asked them to provide.

One of the consequences of this is the National Statement of Expectations for Supported Housing, published by the UK government (England only) in October 2020, which tells local authorities to restrict the number of new supported housing “market entrants”, to restrict the payment of enhanced Housing Benefit (without actually using those words) and exhorts commissioners and revenues and benefits teams to work together in the administration of enhanced Housing Benefit.

“Inside Housing” magazine continues to run an information campaign on the uncontrolled growth of exempt accommodation. Thea Raisbeck on behalf of Commonweal Housing and Spring Housing published “Exempt From Responsibility?“, which focuses in particular on Birmingham; an outlier in exempt accommodation abuse with 22,000 exempt accommodation bed spaces. Many of these are in poor quality housing within which negligible or no services are provided, but which attract high levels of enhanced Housing Benefit. Where does that money go, I wonder?

But it’s not just Birmingham, bad though the situation is there. The MHCLG (now the DLUHC) set up five exempt accommodation pilots in Birmingham, Hull, Bristol, Blackburn and Blackpool all of which are exempt accommodation “hotspots”. Those pilots recently reported.

The “Supported Housing Oversight Pilots” evaluation report is heavily qualified methodologically and contains a plea for more funding for further evaluation. This wish appears to have been partially met by the UK government’s recent announcement of £20m towards a Supported Housing Improvement Programme.

The report recommends that “care, support and supervision” (an Exempt Accommodation rule criterion) should be defined and that regulations around rent levels and subsidy rules should be reviewed. The temptation to use this as a means of exercising cost control rather than Value Generation must be resisted. It might sound a bit “old hat” of me to say that investment in preventative services such as supported housing saves a fortune in otherwise avoidable statutory interventions, but it’s still true. The point should be to deny revenue to dodgy operators, not restrict revenue to good ones.

The report also reflects the National Statement of Expectations for Supported Housing in saying that local authorities should be able to intervene to stop new supported housing supply where it is unnecessary or of poor quality. Many local authorities have set up “gateway” arrangements which prospective supported housing providers have to go through, rather than just setting up and applying for enhanced Housing Benefit.

Rather confusingly, the report claims that “local authorities’ oversight of support is currently limited by existing regulation….”. It seems to me that there is a distinct difference between regulation on the one hand (and the supported housing sector has several regulators) and oversight on the other, which pretty much doesn’t exist. In my view, ALL supported housing providers should be subject to local accreditation as they were during the Supporting People initiative. No accreditation should mean no funding.

Oversight should be based on an independently developed and implemented oversight system based on Value Generation principles.

Given the prominence of some registered providers in what has become the exempt accommodation industry, the Regulator of Social Housing (RSH) in England has sanctioned several exempt accommodation registered providers. The modus operandi of some of those registered providers is to use associated private companies to charge large amounts of money often for unspecified services to supported housing providers (both good and bad) that work as their agents. Let’s do the maths here; if for example, a registered provider has 5000 agency managed bed spaces and an associated private company charges 10% of the rent roll to those agencies (for unspecified services that may not be provided), given an average weekly enhanced Housing Benefit charge of, say, £200 a week, it’s making £5.2 million per year. Where is this money going?

Thus far the RSH has claimed it has no control over third party organisations associated with registered providers, even in circumstances of apparent “disguised profit”. However, that is about to change as a consequence of legislative changes to sections 107, 108, 203 and 208 of the Housing and Regeneration Act 2008, which will give the RSH “look through” powers to demand that registered providers explain where money that has left the regulated sector has gone, and not before time.

The UK government DLUHC is currently conducting an Inquiry into Exempt Accommodation. You can see my submission to that enquiry here. The thrust of my submission is that Exempt Accommodation as a concept should be abolished, that enhanced Housing Benefit should be abolished and replaced with “Supported Housing Rent“, which is an uncapped housing component of Universal Credit, that all supported housing providers should be accredited at local level (as they were under “Supporting People”) and that there should be an independent oversight system for Supported Housing  based on Value Generation principles.

At time of writing the Inquiry is ongoing, but we will be updating you on any progress it makes at our supported housing conference 2022 which, I repeat, is a free event. At time of writing, we have 800 bookings across the six separate components of the conference.

The Exempt Accommodation Project.

One of the serious implications of the abuse of the Exempt Accommodation rules and enhanced Housing Benefit is that local authorities have, in many cases, implemented quite stringent interpretations of the National Statement of Expectations for Supported Housing by making it much harder for supported housing providers to claim enhanced Housing Benefit. I can quite understand their position, but it affects genuine supported housing providers as well as their dubious counterparts.

In addition to making it harder to claim enhanced Housing Benefit, some local authorities have told supported housing providers to register as registered providers. This is because where a registered provider is the landlord a local authority can recover from the DWP all the enhanced Housing Benefit it pays. Where a charity or voluntary organisations the landlord in an exempt accommodation/enhanced Housing Benefit claim, the local authority can only recover 60% of the difference between the Local Housing Allowance rate and the amount of the claim, so the local authority will lose a lot of money if it pays the claim.

However, the RSH has an effective embargo on registering new supported housing registered providers, again due to the conduct of those wrongly motivated supported housing registered providers, many of which have been sanctioned by the RSH.

Our solution to this is the Exempt Accommodation Project, which brokers relationships between reputable supported housing providers and reputable registered providers to enable local authorities to pay reasonable, well-founded enhanced Housing Benefit claims without loss of subsidy.

Talk To Us

If you represent a reputable supported housing provider struggling to claim enhanced Housing Benefit, or a reputable registered provider willing to take a short-term lease on a supported housing provider’s property for a good revenue stream please contact us.

Finally, if you’re looking for values driven professional consultancy advice and support in supported housing, please get in touch.

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

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.