Escalating Rent Levels

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    I am working with a trusted provider of Supported Accommodation mainly taking tenants with severe learning difficulties either in residential homes or in hospital. These referrals are coming from the 1st LA. I am satisfied I have all appropriate evidence and everything is genuine and above board but what I need to ask is how you are feeling about potential escalation of rents.

    Can you please provide me with a rough estimate of say a 2 bed bungalow where the landlord is a RSL where the tenant needs 24 hour care, support and supervision and the property has been specifically adapted to cater for his long term needs and well being. In 2021 we agreed a rent of around £650 a week for this type of accommodation as a ‘guideline’ rent. Now we are seeing rents up to £1000 a week.

    This compared to the bigger picture is still a saving to the public purse but we are seeing an increase in our HB subsidy at a time when DWP think HB subsidy should be reducing.

    Can people please comment and give an indication if these rents trends and scenarios are occurring in your area. I would suggest they are and if so is it a case of just accepting it based on the evidence you have.

    Thank you

    • This topic was modified 2 days, 8 hours ago by mant.
    • This topic was modified 2 days, 8 hours ago by mant.

    My first question would be how is the landlord justifying a rent of £1000.00 a week?


    The majority of these properties are commissioned from the 1st tier LA where the tenants are either currently in residential care homes or in hospital. The evidence of the costs to the public purse are up to £30k a week and the case we are presented with and evidenced is that placing these people in self contained accommodation with 24 hour care can help there wellbeing and in time reduce the costs to the public purse (mainly through social services) even though the costs are being borne by HB.
    I have a stream of evidence relating to purchase costs, renovation works, legal fees etc from the fund provider and of course there is also then the costs of the RSL for their costs.

    Alistair Costelloe

    From a provider’s perspective, we have seen the following:

    – Increase in property prices
    – Increase in development costs
    – Interest rate rises.
    – Reduced availability.

    I spoke with a funder this week who said that the interest rate rise is creating further pressure because investors can get more money keeping their cash in the bank and there is less motivation to invest it. This means that borrowing costs are higher and this affects the overall development cost.

    The issue with the lease-based model is that this all trickles down into the lease rent, and even when a developer is looking for a fair return and the development costs are evidenced, the rents are higher than the market rate for a similar sized property leased from the private market. The issue with these as comparators is that they are not suitable for people with complex needs, and not available to them either, so unless you can find one available to lease long term and where the landlord is willing to adapt/improve if necessary, there isn’t really another reliable method to delivery.

    Ultimately, this increase in cost means that we can either choose to proceed and bear the extra cost and hope that HB will agree with the justification, or we simply don’t do it because of concerns around the impact of the rent level on the HB award, and the risk that it won’t be supported longer term. The test to apply is whether the rent is reasonable with reference to suitable alternative accommodation, but often the scheme is only being delivered because there isn’t anything suitable and alternative for the tenant, let alone available, so there isn’t really anything to benchmark against – we are then left looking at the costs and whether they are reasonable, but this is all in the context of the manner in which the scheme has been delivered.

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