Rent increase more than CPI+1%

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  • #284765
    mark b
    Participant

    We have a Supported Accommodation provider in our area who has notified us of a proposed rent increase for 2023 for their tenants in 2 separate schemes (containing multiple units) – the new proposed rent figures represent a 46% increase. In 2022, the rent increase was just above 9% but the previous 2 or 3 years were around 2%. When we have questioned the increase, the provider has stated that their property lease with the superior landlord provides that the lease amount will increase annually but the landlord has not requested an increase since 2020. The lease they have seems to say that the landlord can impose an increase retrospectively back to the annual review date. The Supported Accommodation provider has decided to increase the rents for 2023 to cover the potential lease charge increase back to 2021.

    Our understanding was that the rent increase was capped at CPI+1% and when we have communicated this to the Provider, they have said that the cap does not apply to them. They have made reference to a Policy Statement on Social Housing which mentions that there are exceptions to the rent cap for a number of different property types including ‘Specialised Supported Housing’. The bar does seem quite high for accommodation to be classified as ‘Specialised’ – offers high level of support equivalent to a care home where entering a care home would be the only alternative and where there is an agreement with the local authority or health service to provide the scheme. The purpose of the scheme in this case is providing accommodation and support for individuals with learning difficulties

    I have been asked to make this post to answer a couple of questions:
    1. Is the Accommodation provider allowed to increase the rent more than the cap of CPI+1%?
    2. Can we allow the increased rent where the core rent figure is significantly higher than the current lease fee between the Provider and the superior landlord.

    I appreciate that I may not have included in depth details of the scheme but any guidance would be appreciated.

    #284773
    peterdelamothe
    Keymaster

    It is almost impossible to know the answers to these questions I think. There might be very limited discretion in very specific cases I guess. The onus here is very much on the landlord and the “oh yes the rules that apply to everyone else do not apply to us” is getting more and more common.

    But I do have a suggestion.

    I would add the landlord to clarify the position in writing with the Regulator of Social Housing. They are very helpful in my experience. Or do it yourself via links below.

    https://www.gov.uk/government/organisations/regulator-of-social-housing

    Please contact enquiries@rsh.gov.uk or call 0300 124 5225

    #284784
    Alistair Costelloe
    Participant

    The RSH Rent Standard and the SSH definition are not applicable to accommodation that is not part of the RP’s social housing stock – this is the workaround that a number of RPs have come up with. By having a small body of social stock to preserve their RP status, they can then operate all of their supported stock as non-social housing, benefitting from the same HB and subsidy rules as the social stock, but without any of the restrictions. The RSH appears to be comfortable with that, providing the social stock isn’t threatened and the provider remains viable.

    The 2021 Sector risk profile states:

    “As the regulator, we will seek assurance from providers that non-social housing activity creates rewards commensurate with its associated risks, that this activity makes a clear contribution to the provider’s core purpose, and that social housing is not put at undue risk”

    Examples of where the RSH have been involved have been the deregistration of Larch, which had 5 social housing units and 261 non-social units, and the recent non compliant RJ for Windrush Alliance CIC, which has 458 units of social housing and 1,621 units of non-social housing. The 2020 judicial review of Inclusion Housing’s non-compliant Regulatory Judgement also addressed the same themes.

    Where it could get murky is where an RP is disapplying the rent standard to properties they consider to form part of their social housing stock – but this is primarily a matter for the RSH to address.

    #284787
    peterdelamothe
    Keymaster

    Good stuff AC….thanks. To me it demonstrates how crazy this entire system has become and why DWP are not prepared to take this system into UC. How can benefits assessment staff be expected to know this?

    Meanwhile Home Reit, one of the largest providers of exempt, is in chaos:

    “Home REIT’s new investment manager AEW has completed lease surrenders and re-tenanting on 10% of the trust’s property portfolio, as rent collection fell to 3% in September”.

    I wonder if a lot of HB money paid to landlords connected with this disaster is going anywhere near clearing tenant (as in claimant) rental liability.

    #284788
    John Boxall
    Participant

    Home

    OUR INDEPENDENT INVESTIGATIONS
    Alongside the significant declines in the company’s share price in recent months, our independent investigations conducted using publicly available information over the course of several months indicate that there may be fundamental issues with the Home REIT’s business model and the valuation of its assets.

    We have found evidence that the company has used investors’ money in a way which runs contrary to what investors were told: they were told that their money would be used for high-quality homeless accommodation, but instead it seems that at least some of that money has been used to fund accommodation for people who are not in vulnerable situations, or to fund accommodation which does not qualify for exempt housing benefit which is intended to assist vulnerable people—such as people at risk of homelessness—who need additional care, support or supervision.

    We have also seen that the company appears to have paid excessive sums to intermediaries and fixers for property—who are connected to some of Home REIT’s largest tenants and who have ‘flipped’ property between owners over a short time period (sometimes on the same day) for increasing prices before it is sold to Home REIT, and that those same intermediaries and fixers are making substantial payments to Home REIT’s tenants. Examples of property portfolio acquisition made by Home REIT which were provided by the company in its response to a critical report published by Viceroy Research on 23 November 2022 indicates that the price paid by Home REIT for a portfolio of property is often approximately twice the price paid by the intermediaries and fixers for the same property a short time before.

    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

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