Public money is lost through the exempt accommodation system
One of the main objectives of the pilot projects was to address the issue of the value of exempt and supported housing. The nature of exempt housing means that if a low level of support is offered by a provider, they can apply – to the Department for Work and Pensions (DWP) or the council – for an exemption from the normal housing benefit ceilings.
For example, a study by the Spring Housing Association and charity Commonweal Housing in 2019 found that some providers were charging up to £200 a week in Birmingham, although the Local Housing Benefit cap for flats shared is only £57.
This means that tens of millions of pounds flow from DWP to exempt providers each year. The most recent estimate puts it at £800million a year. And a lot of that is lost on vendors that don’t provide the right level of support.
In total, the pilots saw 22,699 exempt accommodation claims assessed, with Birmingham accounting for 21,628 of them. The nearest other local authority was Blackpool with 622.
According to the pilots, the additional resources have given boards more opportunity to review and re-evaluate providers with complaints.
In Blackburn, closer inspection of some of these claims led to the reassessment of a major charity providing this accommodation. After that, it was found not to provide specified exempt accommodation. The report also referred two housing associations to the regulator, one of which was downgraded as a result, and the other of which was under review at the time of writing.
A total of 23,677 reassessments of housing allowances were carried out under the pilot projects. In 1,534 cases, applications were reduced and in 1,285 cases, applications were deemed ineligible for supported housing exemptions. On top of that, 225 requests were outright rejected for support reasons or because a provider didn’t provide enough information.
However, the report also highlighted how some providers driven by long-term profit could work around new barriers being put in place and evolve new structures to work within the legal framework. The report also cited the growing number of REITs operating in this area and said it was difficult for authorities to sort out complex rental agreements, which “inflate rental costs because they include rental charges designed to generate profits for investors”.
Suppliers that fall short are now blocked from the industry
In an ideal world, these “providers of concern,” as previously described, would be prevented from providing exempt housing.
However, as the rapid rise of this type of accommodation has shown in recent years, they have not been blocked. This is often due to a lack of resources to block them or a lack of tools to take action.
Part of the report says the lack of regulation does not prevent affected providers from easily settling in without consulting council and claiming uncapped rents with few questions.
However, the pilot projects allowed councils to become greater stewards of the types of providers that were coming into the sector. There was a general consensus that it was difficult to tackle poor quality or unscrupulous owners once they had an accompanying offer in place.
However, there have been some successes in stopping them in the first place. For example, Blackpool developed a new system where new players had to go through a single entry point when they wanted to set up an exempt facility. At this stage, the council was much more demanding of suppliers and estimated that it had saved £2.5 million as a result.
However, even in the case of Blackpool, the council warned that in some cases providers it had blocked ended up in other areas without such strict access controls.
Birmingham is the region that continues to see the strongest growth in new suppliers. Data provided by the council revealed that it had received an impressive 390 applications from new suppliers during the pilots. Of these, only 62 received housing benefit, while 211 were outright refused, and the remaining 117 had their rents restricted.
However, despite this work, the report points out that the number of complaints has further increased over the period, indicating that access control will not always stop oversupply in the city.
There are widespread problems with the quality of exempt housing
One of the key things that the pilots allowed the various local authorities to do was to increase the number of inspections carried out on their properties.
With additional resources, Hull was able to double its number of inspections to 322, Blackpool said it had increased inspections significantly and Birmingham, which increased its inspection team from two to nine inspectors, carried out 517 inspections, doubling of the 250 planned. could have carried out without support.
A total of 1,025 property inspections were carried out across all local authorities. The inspections revealed a number of issues when judged against the Housing Health and Safety Rating System, which is used by councils to assess the standards of properties.
A total of 2,926 “category one” and “category two” hazards were found. More worryingly, 1,648 of them were Category 1 hazards, meaning hazards that pose a “serious and immediate” risk to a person’s health and safety. Once again, Birmingham led the way, with 1,532 out of 1,648. Of those hazards, 876 have been removed at the time of writing.
Of the 1,278 Category 2 hazards, 535 had been removed. However, pilot authorities responding to the review said that often the vendors with the lowest ownership standards were the most difficult to engage with, and that there was a lack of law enforcement available to take action against them as their standards were poor but not. illegal.
In total, there were only 76 formal actions in the entire pilot, while 489 informal actions were taken, the vast majority of them by Birmingham and Hull.