Terms & Conditions

[Anonymous]

There is an interesting debate on rightsnet at the moment that is inching its way towards the issues at the heart of the supported accommodation cases which come up more and more frequently. It is “inching” because the participants all feel inhibited for one reason or another from speaking freely. I don’t, because I haven’t got any personal involvement in any cases of this sort so I can stir up trouble without embarrassment.

As I see it, these are the issues:

– rents for supported accommodation seem to be far in excess of rents for non-supported accommodation – even after you take out the cost of personal care
– take the following ficitious example
Case 1: a house with three sharers on JSA – LRR £150 a week, not much different from the full asking rent
Case 2: a house with three sharers who have learning disabilities and need care and support, which is separately funded. LRR £150 a week, full rent £600 a week

Local authorities cannot understand why it costs several times as much to manage and maintain a building occupied by tenants who receive care and support than it does to manage and maintain a building where the tenants do not receive those services. Given that the care and support is paid for separately, councils ask themselves: where are these extra costs coming from?

– councils become suspicious when they see that a charitable or voluntary landlord is leasing a property from a commercial holding company, and the same individuals appear to be connected to both organisations. Councils worry that businessmen are using the vehicle of a charitable/voluntary intermediary to take advantage of the exempt accommodation provisions which, as we know, make it very difficult for councils to restrict the claimant’s rent. Councils fear that someone at the top of the chain is making an excessive profit over and above that which a normal commercial landlord would expect to make from a single property.

Councils feel the onus is on the providers to explain just how it that they cannot avoid charging what seems superficially to be a preposterous amount of rent for providing bare accommodation, exclusive of care and support.

Does that about sum it up? Anyone able to justify these rents? I’m open-minded.

[Darren W]

I guess the main reason council do not challange it is because of not wanting to cause distress to the claimants, who are stuck in the middle.

However there is caselaw to support councils reducing the amount. With Regina v Manchester City Council ex parte Baragrove Properties Ltd (1991) being a prime example.

[Kevin D]

As one of those involved with the Rightsnet discussion, this may shed some light on the apparent “inhibition”.

Three of those on that thread, Simon Ennals, “keysey2” & myself, are, or have been, involved with cases where “finality” has not yet been reached (e.g. Tribunals outstanding and / or statement of reasons not issued and / or unclear if case(s) will proceed to Commissioners). It is also why, even now, my posts on HBinfo are, believe it or not, somewhat muted in relation to this issue.

Even in cases where finality was thought to have been reached, further developments appear to be unfolding…..(aka more loophole exploitation?).

In reply to Peter’s observations; that is a fairly neat summary. There are a small number of occasions where there are substantial costs in adapting the property(ies) for disablement needs. However, the main “justification” that appears to abound is that the leasing (“holding”) company is charging such high rents to the frontline L/L. Which would be fine, until, as Peter notes, you find the various connections between all of the parties (Directors in common, Company Secretaries, shareholders, staff, and so on; both current and former).

When that layer is uncovered, the argument often moves to the high mortgage costs. Which, at first glance, you may think “fine”. Except, you then find that the mortgages are short-term 10 yr mortgages. In short, a (relatively) quickly financed property purchase paid for by HB. And with no suggestion that the rents will decrease at the end of that period.

In reply to Darren’s comment, suggesting that the reason LAs pay is to avoid causing distress to claimants, I’d suggest the reality is (generally) somewhat less altruistic. The plain fact is that some LAs have simply spinelessly capitulated and failed to properly investigate the background to some of the “arrangements”. I’d also argue that, where LAs have paid in the knowledge that such arrangements are, how shall I put it, “questionable”, it is arguably unlawful to be paying HB on the basis that “old” HBR 11 applies.

As for [b:82cc71b568]Baragrove[/b:82cc71b568], that is most certainly one piece of case law that can by relied on – at least in part (and if used properly). One of the most useful aspects of Baragrove is the most obvious; this being that contrivance can be found where a third party has sought to take advantage of the HB scheme – it is not necessary for the clmt to be complicit.

One further aspect of [b:82cc71b568]Baragrove[/b:82cc71b568] is “targetting” – i.e. where a third party (usually the L/L) pro-actively seeks prospective tenants from a particular class, or group, for the specific purpose of being able to charge higher rents that can only realistically be met by HB. Such conduct by a landlord will go a long way to providing a basis on which an LA will be able to decide contrivance. As will terms in documents that do not reflect the reality of the situation…..

Regards

[jmembery]

I think there is another issue to add to the discussion. This will probably be unpopular as it impacts on “legitimate” landlords and “genuine” claimants so I will brace myself for criticism.

The issue is who decides on what funding should be available to provide supported living for people with disabilities?

It would appear to me that it was the Government’s intention to cover all the “additional” costs of providing supported living through the Supporting People scheme. It also appears clear that the Government intends to use that scheme to impose a limit on these costs.

The problem for providers of supported accommodation is that the restrictions the Government places on the funding available through SP means that very few new supported living schemes can now be provided as the money is simply not available.

In an attempt to get around the SP restrictions there has therefore been a shift in the classification of some services away from SP eligible categories where there is little additional money available to “intensive housing management” categories which it is claimed are eligible for HB, but really are not.

[Anonymous]

I did wonder whether there was element of that involved too – people who are genuinely trying to provide proper care are finding that they cannot cover the cost through the supporting people budget, so they are resorting to sophistry in an attempt to disguise the cost of care as part of the basic rent. They are in an unfortunate position; but (if I can say this without getting him into trouble) Kevin’s comments also confirm my suspicion that there are some shifty characters out there (not necessarily any of those who have been mentioned in discussion threads or Commissioners’ decisions!).

[peterdelamothe]

The press reported it as:

“Legal experts have warned that supported living residents face severe housing benefit cuts and even homelessness following a decision by the social security commission.

The commission ruled last month that three men with learning difficulties renting supported accommodation from Rivendell Lake Housing Association were only eligible for £45 housing benefit each week, less than a fifth of their full rent.

The men argued that housing benefit should cover their total rent, citing a benefit rule that generally prohibits restricting benefit payments to people receiving support from housing associations and charities. The trio live with a full time carer and are unable to work.

But commissioner Charles Turnbull ruled that despite Rivendell being a voluntary organisation the men only qualified for £45 since their care was provided by a third party, Citizenship First.

Angela Lyne, partner at Trowers & Hamlins, said the decision had ‘serious and wide ranging’ implications for organisations outsourcing care and support services to third parties.

‘Housing providers in similar supported living schemes risk losing revenue to the extent that schemes may become unworkable, which could result in disabled people losing their homes,’ she said. ‘Clearly an urgent review and clarification of the relevant regulations is essential. Housing providers should review the structure of their schemes in the light of the decision.’

[Kevin D]

I wonder whether the press reaction would have been quite the same if one or two of the Commissioner’s observations had been brought to their attention. In particular, that agreements had been retrospectively changed and the fact that one of the terms in one of the agreements was “…wholly at variance with the reality of the situation”. (para 32 of CH/0423/2006).

The term in question was rather important – it purported to suggest that care was provided on behalf of the L/L. That would potentially have brought the claims into the exempt accommodation exception – with no possiblity of applying the LRR (and, in all probablity, little chance of restriction under “old” HBR 11).

Erm, oh dear, here I go again…..

[peterdelamothe]

I dont think it is relevant Kevin. Whatever the issues in a specific appeal case, the important point is much wider than that. There is little doubt that SP providers are trying to target HB again and for the good reason that budgets are being cut and / or LA’s are looking for different provision.

Look at this as another example:

“Stadium Housing Association is set to launch a scheme that uses housing benefit to boost its portfolio of family homes without government grant.

The association has earmarked £40 million to buy 150 properties on the open market, around three quarters of which will have three or more bedrooms.

Most of the capital will be made up of lending, which will be serviced by tenants’ housing benefit payments. The association expects to put in some cash from its reserves

Although rents will be high, families will be offered the chance to make a ‘fully informed choice’ over whether to live in the properties acquired for the project”.

There is no suggestion that this RSL is doing anything but trying to tackle growing homelessness. Building decent new homes is surely right. On the other hand, the boldness is suggesting that high rents will be covered by HB is breathtaking. Worse, it puts LA’s bang in the spotlight. Refer the rents and the scheme collapses. Don’t refer and end up in battles with auditors and the BFI. Will these properties only be available to those on benefits on the basis that no-one else can afford them?

It really is time DWP sorted out what HB is there to do – but the collapse of LHA in the social sector undermines that. There is a need for a level playing field rather expecting Housing Benefit officers to make decisions that can impact on local housing build strategy.

[jmembery]

The DWP have had plenty of opportunities to tackle this issue, but just don’t appear to want to grasp the nettle.

In my opinion, much of the trouble with Supporting People stems from the DWP not giving clear firm guidelines over Transitional Housing Benefit which lead to many service providers and social services departments seeing what was essentially an accounting mechanism to identify the amount to be transferred out of HB to SP as an “exciting new source of funding” resulting in the SP pot being twice as large as expected and thereby causing the current crisis in that budget.

There was also a real mismatch between that information that did come out of DWP and that which came out of the ODPM (as was).

The one really useful report (THB a tripartite approach) was never generally distributed and I for one only came across it by accident searching on the web for something else. Other DWP internal reports identified problems in THB early on, but the recommendations were not acted upon.

The DWP have said they were going to address this “old” Reg 11 issue a couple of times.

“January 2005 – HB Direct
We are aware that a growing number of you are increasingly facing a subsidy shortfall for certain vulnerable tenants in supported accommodation because you are unable to restrict the rent through the ‘saved‘ version of HB regulation 11, as suitable alternative accommodation is not available. We will be undertaking a review of the HB arrangements in this area within the next months and will keep you informed of developments.”

August 2005 – HB Direct.
“Rising costs of supported accommodation
Over recent months a growing number of you have expressed concern over the level of rents being charged for supported accommodation and the difficulty you face in restricting rents for these old scheme cases. There have also been concerns raised about the subsidy shortfall as the rents are far higher than the rent officer’s determination of a claim-related rent.

You have described situations where social services and health authorities turned to existing charities and recognised voluntary groups to provide suitable supported housing for their clients. These groups turned to property companies, commonly associated to these groups’ advisors or consultants, who purchased accommodation to suit the prospective tenant’s needs. They allegedly purchase the property with short-term business loans for which the repayments need to be covered by correspondingly very high rents.

We are currently looking into the extent to which private companies are looking to maximise profits by taking advantage of the more beneficial provisions for old scheme cases.

We would be interested to hear of your experiences with individuals, companies, voluntary organisations, housing associations, etc who appear to be taking advantage of old scheme rules by trying to fit within the definition of ‘exempt accommodation’ and charging high rents. If you could send us any details, we’d be very grateful. In the meantime we will keep you posted.”

G2 2005 talked a good game, but without changes in legislation it just won’t stick at appeal. So why are we still waiting for legislation changes?

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