Approached by a Social Housing Provider?

Approached by a Social Housing Provider?

10:25 AM, 21st January 2021, About 9 months ago 10

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I have been approached by a Social Housing Provider to use my property as a domestic violence/women’s refuge now it has become completely vacant. They offer their clients licences as opposed to as AST.

I am assuming they also are exempt (and therefore I do not need to apply for ) an HMO licence? They are a small Ltd company local to the area and while I’d love the idea of the property being used in this way, I am of course worried about the implications.

I have asked questions before about the Rent to Rent system, but is this more of a commercial let and therefore if entered into on a fully commercial basis (I will ask my solicitor to draw up the contract) will this be less risky?

I still don’t fully understand how these Landlord/Provider/Tenant relationships work exactly as there seems very little to read up on them. Seems like an area shrouded in mystery. I don’t really understand how such SP get clients – if they come through the system from the LA as a referral or told to apply directly to the SP then surely the LA’s check up on the SP’s to ensure they are working to a certain standard and remit?

Are the LA’s literally referring clients to look elsewhere for help simply as they can’t help them directly, and therefore there is a whole ‘middle area’ which has been bourne from this situation?

Who regulates the SP’s? How are they assessed? What licencing to they need themselves to operate? I read/heard somewhere that ltd company SP’s can simply up and go leaving the LL to deal with the clients/tenants directly. Where does a landlord stand then??

Is this really a total minefield just not to enter under any circumstance?

Reluctant Landlord



Comments

by DGM

10:54 AM, 21st January 2021, About 9 months ago

I was approached about 18 months ago by a similar scheme and said no, my letting agent was unsure as well so I agree this seems shrouded in mystery and what the landlord obligations are.

by Luke P

11:45 AM, 21st January 2021, About 9 months ago

I’d be interested to know how a company (even it is is providing refuge services) can issue licences. It can only be a licence, rather than be a tenancy agreement, if the situation is as such (not just because that’s what they say).

by Freda Blogs

12:01 PM, 21st January 2021, About 9 months ago

Be very careful – depending on the organisation and the deal you strike, this could work out well for you in terms of a long term letting, or it could be a disaster.

In my professional capacity I have acquired properties for Women's Refuge organisations who took on responsibility for the property so that you had only one party to deal with.

In case you are not aware, refuge addresses have to be kept secret, and the security measures which need to be undertaken are enormous, so expect some heavy duty security adaptations. Remember they are trying to protect the residents from abusive and potentially violent partners.

I don’t want to over dramatise, and as much as you or I may feel empathy for a Women's Refuge, this is a business deal and you have to think through the consequences. There are a number of well-meaning voluntary organisations out there doing very good work, however you need to ensure that any organisation you deal with needs to have decent funding sources and cash reserves, and the ability to pay for appropriate legal advice and property works. You must agree comprehensive heads of terms to protect you with regard to tenure, works proposed, reinstatement - and risk.

I note that you have posted on here previously seeking advice with social housing providers and have been unsure how to proceed. If you are minded to go ahead, I strongly urge you to take professional advice - not only to distance yourself from the emotional aspects of the deal, but more importantly to protect yourself against the possible adverse consequences of it. Most likely the property should be taken via a formal lease from you to the Refuge. As a commercial lease (with possible Landlord and Tenant Act implications), plus possible HMO implications, I don’t think it is something an average High Street letting agent would have experience of. My suggestion is that you seek a Chartered Surveyor with, ideally, both commercial residential experience too). They can agree Heads of Terms with the Refuge on your behalf and will liaise with your solicitor on lease terms.

I hope that helps.

by DSR

12:19 PM, 21st January 2021, About 9 months ago

Reply to the comment left by Freda Blogs at 21/01/2021 - 12:01
Yes I have been toying with the idea for ages and yes you are right I post on and off because I still cant decide which path to take. All this came about as we had a SP given notice after 5 years on the property so it became vacant. They looked after it perfectly, no issues so experience so far is good. My father did the original deal with them so I was never party to what the agreement was etc but since then times have changed and I get the impression there is a lot more risk, especially for the LL - as in for a start you can't really check if these SP are the what they say they are. Many are Ltd companies only set up a year or so ago, not much assets or capital and little other accounting info when you look at companies house details. They say they have referrals from Councils but councils wont talk to you about them, not even acknowledging if they use them or not in the first instance!
I suppose I have answered my own question really but the implication of not using one means a longer term shift. It might be easier to sell the very large house and diversify into two smaller houses and then I can rent to families direct (benefits or not). With large houses, and the LHA being capped at the rate for a 4 bed, the return is not comparable to say 2 smaller 3 bed houses even if they are capped at the 3 bed rate.
and the More control I guess from this perspective. I DO NOT want to run it myself as an HMO directly. Also the property is currently vacant so want it filled as income being lost. Difficult dilema.
If anyone wants to buy fully refurbed (officially 4 bed house, but 2 massive receptions downstairs mean a 6 bed, as still got a huge breakfast room and separate kitchen) with two bathrooms (one on each floor), with all certs, PAT testing, new beds etc in Birmingham, ready to go right now......let me know and I'll send you details. 🙂

by Robert Mellors

13:19 PM, 21st January 2021, About 9 months ago

I am a private landlord personally, but I also run a small "not-for-profit" housing association (Choice Housing Trust) that provides supported housing (aka supported living) to single homeless people in Sheffield, via a R2R model. I have been doing this for over 16 years so have built up a lot of experience in this field.

There are a huge amount of issues that you need to be aware of and take into consideration, and it is vital that you ask all the difficult questions and are satisfied with the answers that you receive from the housing association/charity.

Supported Housing is being promoted by some as a new way for landlords to make money from their properties, but in many instances (like with many R2R scheme promoters) the promoters are not pointing out the risks to the landlord, and the landlords are sometimes being misled into agreements that are not suitable.

While I would not wish to put anyone off leasing a property to a housing association or charity, as it CAN be a great solution for all parties, I do feel that it is vital that you understand the implications of any agreement you may enter into, and that all parties are happy with the terms agreed.

by Robert Mellors

14:02 PM, 21st January 2021, About 9 months ago

"I have been approached by a Social Housing Provider to use my property as a domestic violence/women’s refuge now it has become completely vacant. They offer their clients licences as opposed to as AST."
- Yes, it is possible for a DV refuge (and other charities etc) to grant their residents a "licence" rather than a tenancy, but this will depend very much on the individual scheme and how it is operated in practice and the services it provides to their residents.

"I am assuming they also are exempt (and therefore I do not need to apply for ) an HMO licence? They are a small Ltd company local to the area and while I’d love the idea of the property being used in this way, I am of course worried about the implications."
- They may or may not be exempt from having to apply for a mandatory HMO licence, depending on the legal constitution of their organisation and/or other factors.
- If they have said they would be providing "exempt accommodation", they may be referring to the HMO Licence exemptions, but could instead be referring to exemption from LHA rates of Housing Benefit, or even exemption from the Protection from Eviction Act 1977. You should perhaps check what exactly they are referring to, and look up the implications.

"I have asked questions before about the Rent to Rent system, but is this more of a commercial let and therefore if entered into on a fully commercial basis (I will ask my solicitor to draw up the contract) will this be less risky?"
- A R2R agreement should be done on a lease agreement, so this would be a company lease of a residential property. Some solicitors will understand this, but some will not. Doing a R2R to a charity or housing association is generally less risky than doing a R2R to a private R2R operator.

"I still don’t fully understand how these Landlord/Provider/Tenant relationships work exactly as there seems very little to read up on them. Seems like an area shrouded in mystery. I don’t really understand how such SP get clients – if they come through the system from the LA as a referral or told to apply directly to the SP then surely the LA’s check up on the SP’s to ensure they are working to a certain standard and remit?"
- Every one is different so it is difficult to find information of a generic nature that could explain how they work. Basically they fit into niche markets where there is a demand for supported housing for particular client groups. They work outside the normal Local Housing Allowance rules so the additional costs they incur in providing accommodation to high risk groups can be covered, and they may also receive separate funding for the provision of support to their residents, perhaps through a commissioned service, charitable grants, or even through fundraising or trading activities. The standards they work to will be a combination of the legal requirements, the commissioning body's requirements, the funder's requirements, statutory guidance, contractual agreements, and the requirements of relevant regulatory authorities (which in turn will depend on the type of organisation they are and who their client group is, i.e. their "tenants or licensees").

"Are the LA’s literally referring clients to look elsewhere for help simply as they can’t help them directly, and therefore there is a whole ‘middle area’ which has been bourne from this situation?"
- The LA may refer people to the supported housing provider, and/or they may receive referrals from other organisations.

"Who regulates the SP’s? How are they assessed? What licencing to they need themselves to operate? I read/heard somewhere that ltd company SP’s can simply up and go leaving the LL to deal with the clients/tenants directly. Where does a landlord stand then??"
- Who regulates, assesses, licenses, supported housing providers will depend very much on who they are (legal constitution etc) and who their clients are (tenants/residents), and who has commissioned their service.
- Where the property owner landlord stands in the event of a supported housing provider closing down will depend on the legal liabilities agreed between the parties in the lease agreement. There is no such thing as a 100% guarantee, as nobody knows what can happen, but I certainly feel that leasing to a charity or housing association is far far far safer than letting direct to tenants.

"Is this really a total minefield just not to enter under any circumstance?"
- It can be a bit of a minefield, so you just need to get the answers to all your questions, know what the risks are, and then make the decision whether or not to proceed.

by terry sullivan

14:33 PM, 21st January 2021, About 9 months ago

lease the property on commercial lease--fri--get solicitor to draft

personally id say no--never trust has--shysters

by DSR

14:41 PM, 21st January 2021, About 9 months ago

Reply to the comment left by Robert Mellors at 21/01/2021 - 14:02
I appreciate all your feedback and the time spent explaining this to me I really do Robert. I have made the decision that its still too much of a grey area for me, (and yes it maybe that I need to inform myself more) but at the present time given the lack of detail from SP's themselves and the services that refer to them, I feel it is too big of a risk. I appreciate they are niche and funding may come from other areas, but if they are unwilling to shed any light on this then that's an issue for me ad if this info not easy to find myself then again, makes me nervous. More niche means more clarity required. I shall sell instead. This way I have more control over what I do. I will try and find out more now about how this niche market works as I have other large houses that I could still offer up to such organisations when the time is right and I feel confident about doing so. Thanks for everyone's valuable feedback - truly appreciated. 🙂

by Joanna

19:37 PM, 21st January 2021, About 9 months ago

Reply to the comment left by RL at 21/01/2021 - 14:41
Hi, I've just seen your post. Can you please send me the details of the organisation who approached you? I'm also based in Birmingham and have been trying for some time to find good housing association for my future investment, but wasn't lucky. I would appreciate if you could post their name/contact details or send it to my privately to: joabra79@gmail.com Thank you 🙂

by Joanna

19:42 PM, 21st January 2021, About 9 months ago

Reply to the comment left by Freda Blogs at 21/01/2021 - 12:01
Hi Freda, you mentioned that 'In my professional capacity I have acquired properties for Women's Refuge organisations who took on responsibility for the property and there are a number of well-meaning voluntary organisations out there doing very good work' Could you perhaps recommend some good organisations, who take care of vulnerable people in/around Birmingham area? I've trying to find some good ones for a while now, but there is not much information available so if you have been in this industry for a while and can suggest some organisations with contact details, I would totally appreciate it. Please reply to: joabra79@gmail.com Thank you 🙂


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