Reply To: Private Landlord to RSL

Peter Barker

Yes: you will be receiving new HB claims from people occupying either exempt or “managed” accommodation. It is quite a common occurrence.

Of course the lease rent payments will be ludicrous, and the current owners might not lease directly to an HA, they might sell to an REIT (for about double the property’s open market value) who will then lease the property to an HA for a preposterous amount of rent. But the rent will be no different from what you are already covering for other schemes and they will probably have researched that as part of their due diligence. It’s a racket, but what can you do?

Well, you can risk referring the tenancies to the Rent Officer if you are confident that it will not be exempt but only managed accommodation. Perhaps even the threat of doing so will influence the negotiations about the amount of lease rent.

You could also hint that you will raise concerns with the social housing regulator if the HA are going to argue that this is SSH. You can remind them that SSH is still social housing and must therefore be made available below market rent (Housing and Regeneration Act 2008 definition). They will cheerfully tell you that SSH is a separate market where property owners make enormous returns quite legitimately, and they are still setting their rents just within the market level. Or they might even say this is not part of their social housing portfolio at all, therefore the rent is not regulated in any way. Remember, this is the non-profit sector where serious profits can be made. No property owner with any sense goes around operating on a for-profit basis – how on earth would they expect to make any profits that way?

And you have Reg 13 and Reg 9, but with a very heavy burden of proof.

You might have a stronger Reg 9 case if the tenants or their deputies are pressured to surrender their existing tenancies so that the HA can start charging them several hundred pounds a week immediately. As I understand it, a change in the freehold/head leasing arrangements would mean that the landlord’s interest in the existing tenancies passes to the HA, but the HA cannot just act as if those tenancies don’t exist. So they might have to phase in their new rent regime as the existing ASTs expire and/or new tenants move in.