The Regulator of Social Housing has today published a report on the fundamental issues with some leased-based provision of specialised supported housing.
This is where social landlords lease properties on a long-term basis, to provide much-needed specialised housing for people with complex support needs. The ongoing level of support should be similar to that provided in a care home, while enabling people to live independently in the community.
Over a number of years, RSH has found significant and ongoing issues with some landlords in this part of the sector. Many have not been well run and have become financially distressed or insolvent when financial risks have crystalised.
RSH continues to tackle the issues that fall within its remit. It has taken action to improve the governance and decision making of some landlords. RSH has also made landlords address severe conflicts of interest, which had resulted in some taking on unfavourable lease terms and unsuitable homes from freeholders.
Yet very few lease-based landlords are delivering specialised supported housing in a way that consistently delivers the outcomes in RSH's standards. There are still significant issues, including:
The imbalance of risk and reward between the social landlord that leases the property and the freeholder that owns it. Social landlords generally pay inflation-linked leases for at least 10 years (and often longer), which absorb a large part of their rental income despite carrying substantial responsibility.
Limited capacity to manage risks, ongoing repairs and maintenance, and void periods when the property is empty and no rent is paid.
Weak governance, with some boards not understanding the scale of their lease liabilities and not challenging these arrangements at the outset.
Some landlords taking on a large number of homes without understanding the needs of tenants or the homes they live in. This can lead to poor outcomes for tenants and landlords incorrectly claiming rent exemptions to meet their lease payments.
RSH has concluded that there is generally not enough flexibility in current lease terms for landlords to manage risks effectively. For the model to be sustainable and to protect tenants' homes, landlords are going to have to address the issues raised in this report and this may need further negotiations with the freeholders.
Jonathan Walters, Deputy Chief Executive of RSH, said:
"Some landlords that provide specialised supported housing are exposed to a significant number of risks as a result of long-term and inflexible lease structures. The burden of risk often lies with the social landlord rather than the freeholder, and this can lead to viability issues and poor outcomes for tenants.
"We will continue to engage actively with the landlords who are failing to deliver the outcomes in our standards, and we will keep a range of regulatory interventions under review.
RSH published a report in 2019 about the issues in this sector and has continued to work intensively to tackle the issues that fall within its remit.
Notes
RSH promotes a viable, efficient and well-governed social housing sector able to deliver more and better social homes. It does this by setting standards and carrying out robust regulation focusing on driving improvement in social landlords, including local authorities, and ensuring that housing associations are well-governed, financially viable and offer value for money. It takes appropriate action if the outcomes of the standards are not being delivered.
