Homelessness suitability order and PRS landlords by Ben Reeve-Lewis

by Ben Reeve-Lewis

9:03 AM, 29th October 2012
About 8 years ago

Homelessness suitability order and PRS landlords by Ben Reeve-Lewis

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Homelessness suitability order and PRS landlords by Ben Reeve-Lewis

A bombshell was dropped recently. Admittedly an expected Bombshell, but it took all us people working in the public sector by surprise in the speed of introducing the Homelessness Suitability Order, having hung around in the wings for over a year.

Since the advent of the Housing Act 1996 councils have been able to make offers of private rented accommodation to homeless applicants as a discharge of duty but the offer was always a voluntary take-up, called the “Qualifying Offer”. The new suitability order abolishes the qualifying offer, so, in short, a council can prevent homelessness by offering someone walking through the door, a 12 month AST.

If they refuse the offer and opt instead to go through the full homelessness assessment route the council have to oblige but if the applicant passes all 5 tests and is eligible for the full housing duty, what is likely to happen is they get offered the same property as when they first walked through the door. If they turn this down the council can stamp the file “duty discharged” and that’s it done. NEXT!!!!!

The Homelessness (suitability of accommodation) order (England) 2012 was, as seems to be this government’s style, hurriedly dumped in relevant laps with no time to cobble together any arguments. The order is in from 9th November 2012, or I should say, available to any council who choose to use it from that date.

The stated aim is to break the route between homeless applications and social housing. No more will people be able to go ‘Dahn the cahncil’ to get a council house. We haven’t got them; they’ve all been sold off.

Now there’s a caveat to this, in that the property being offered has to be suitable. There are 4 categories of suitability and the big fly in the ointment is that the property must be affordable.

In London, the gap between LHA levels and market rents means that many offers won’t be affordable, so where does that leave the council?

They have 2 choices:

• Procure enough PRS landlords willing to work with them so they can discharge their duty in an environment where homeless applications have risen 38% in the past year.
• Start discharging duty by sending homeless applicants to areas where the rent gap is affordable.

To use route one councils are going to have to seriously up their game and starting asking you lot what you need from councils to entice you to form a partnership and respond to what they are hearing (possibly flying pig land but hopefully not, if I have anything to do with it)

Route 2 relies on council members at committee level accepting the notion of out of borough placements, which becomes a political hot potato for them. Look at the furore when Newham announced they had approached Stoke about taking their homeless placements and Croydon when it came out they were doing the same with Hull.

So if council committees, fearful for the voter-base decide not to use out of borough placements councils will have to stack families in B&B waiting years for non-existent council and housing association properties to come up. This will bring the ire of central government and the press down on them for breaking rules about putting families in B&B for more than 6 weeks. It happened to Croydon recently following the Newsnight programme.

If they don’t have landlords working with them and they can’t use out of borough placements and they can’t put families in B&B they will have to pay the difference between market rents and LHA levels, just to get people sorted, which raises the very real prospect of the housing departments going bankrupt.

As you can see, for councils where local rents are far out front of LHA caps they are caught between the rock and the hard place. Smart councils will be looking to the PRS to help them cope, I’ve been banging on about this for a couple of years since I first saw the writing on the wall but as I travel around the country as a housing law trainer I see little ability in council’s being able to think in a more entrepreneurial way and that worries me.

Councils can come up with a wealth of strategies; the world really is their oyster in that sense. Localism has loosened up the way that they are allowed to operate, even turning a profit (In meetings you have to refer to it as ‘Income Generation’ in case those old council warhorses have heart attacks) but they can’t begin to get to those strategies until they learn to change their thinking about who they are and what they do.

Councils have decades behind them of being providers of services, they need to step down from that and start seeing their role as enablers and facilitators, working in partnership with PRS landlords and a range of external services, more like a hub of a wheel of services that they don’t necessarily have to provide themselves anymore.

Will they realise in time though? That’s the big question.


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Comments

12:47 PM, 29th October 2012
About 8 years ago

Oh the dream! Some day it will be possible for a private investor to offer their property knowing that there is a support network of pastoral care, guidance and support available to troubled tenants. Oh. They already do! It's called Student Accommodation. WHY has it been so difficult for councils to realise that PRS landlords are investors with a bricks and mortar asset and not a free social care resource! The first council to meaningfully engage with the PRS will get applause from me! Go Ben!

Ben Reeve-Lewis

13:42 PM, 29th October 2012
About 8 years ago

Haha Cheers Teena. I am becoming messianic about this. For me, having spent years working in landlord tenant disputes and having the added perspective of once being a landlord and for a short time a letting agent I can see, as plain as day what need to happen and it frustrates the hell out of me that conventional council thinking makes them blind to the solution that is staring them in the face.

The new Suitability order has just added some urgency to it. Any successful organisation or even organism has to adapt to it's surroundings. The suitability order has radically shifted the housing world on it's axis. Councils have the choice of being the Phoenix that rises from the ashes or the Dodo, its up to them

Jonathan Clarke

14:47 PM, 29th October 2012
About 8 years ago

Ah light at last at the end of the very long tunnel. The tables are turning. I`m war weary but still listening. I offered them my places as a B&B but they declined the offer. I asked them to work with me so we can mutually support a tenant in need when they are to be made homeless but they declined to answer my e mails. I asked them to pick up the phone to answer my query about a direct payment but It takes them 30 mins and then even when they do no apology - just a grating, acerbic. patronising tone in their voice . I now (with just a hint of a smirk) wait for the day when they will be forced to phone me for help. My dilemma - Shall i be the better man and be the responsible adult that is the norm or will temptation take a childish hold on me and relish the revenge as I drink in the power and keep them on hold for a full 30 mins... Ooh only time will tell.

Ben Reeve-Lewis

15:04 PM, 29th October 2012
About 8 years ago

Johnathon, relish the smirk haha

I know it's a bit weird that I am a council employee and yet I talk about them as if they are a different breed but I have never played it the bureacratic game and feel frustrated at the restrictions placed upon me when all I want to do is get the job done. I was self employed housing law trainer for 8 years and I went back into the council but never lost my private sector head, the ability to just come up with a solution without having endless bloody meetings.

The suitability order is accelerating things that councils should have been getting a grip on a couple of years ago (To be honest and genuinely not to big myself up, I thought this way back in the 1990s). There are some genuinely good people in councils but the mindset is accreted. In that sense the new suitability order helps shift thinking, the rest has to come from people like me working in councils who see what needs to be done. Our biggest obstacle is going to be politicking and more than a fair bit of 'Back-Covering'

Puzzler

15:44 PM, 29th October 2012
About 8 years ago

Excellent article if a bit confusing in its explanations of the policy (and apostrophes!) - I would love to assist in providing accommodation in this sector but it is very hard to find lenders who will finance it. They have minimum values of £50 or £75K so any purchase below these levels (obviously I am not in London) has to be cash. What is needed is a scheme for enabling private landlords to buy. I don't have any suggestions but perhaps other readers do.

16:18 PM, 29th October 2012
About 8 years ago

Ben,

I'm from the US, some of terms and acronyms are a bit foreign to me, but I am curious about this system in general. This system addresses individuals would are about to be evicted by landlords and would end up on the streets if not for the subsidized housing offered, correct? Under the new suitability order, councils can claim "duty discharged" on any individual who refuses the offered 12 month property. What happens to "duty discharged" folks, they become homeless? Thank you.

Tony

Ben Reeve-Lewis

16:50 PM, 29th October 2012
About 8 years ago

Blimey Tony I think there may be a world of difference between homelessness duties in the US and the UK. They arent even the same in Scotland and Wales, which in US terms would be 'Just down the road' but in the UK are different countries, even with different languages haha

NO Its not about people being evicted, its about homeless people in general, applying to councils (city hall?) for housing.

They have to pass 5 tests to be owed a full housing duty. If they pass the tests the council has to find housing for them by law. Up until now the duty was discharged mainly by giving the a council or housing association property (social letting) A homelessness unit could offer them a private letting but they could reject it and wait for a council house. Now that right will be gone. All a council have to do to discharge their duty is offer a private rented property. If the homeless applicant rejects that the council dont have to do anything else, the duty is considered discharged and they have to sort themselves out.

Hope that explains what us brits get up to 🙂

17:29 PM, 29th October 2012
About 8 years ago

Thank you, Ben. Yes, there seem to be differences in systemic approach to addressing homeless in all countries. I am trying to research the approaches for some current work I am doing to alleviate homelessness issues. Just collecting ideas! Thanks again.

Puzzler

20:42 PM, 29th October 2012
About 8 years ago

Thanks for that, I hadn't understood it in the article either! It's quite sensible, then, and I am surprised it wasn't done sooner.

23:00 PM, 29th October 2012
About 8 years ago

I know we have discussed at length the issues surrounding WHY LL won't take LHA claimants.
I believe you could advise EVERY council in the UK what LL want to take on HB tenants.
NO futher discussion is needed.
LL don't tend to have anything against HB claimants per se.
It is the existing system prevent tenants being evicted where rent is NOT paid.
For myself to consider taking on a HB tenant I would wish to know that after 1 month and 1 day I could have a tenant removed from my property for failure to pay the contracual rent by the police.
The alternative would be for me to be able to obtain a RGI policy on the tenant.
Presently neither of these avenues are available.
A guarantor who would pass a RGI check is rare for a HB claimant to source; that would be acceptable as I would still have RGI
There has just been a RGI policy launched by a LA up North who has some very good LHA strategies, along with John Paul of Castledene.
RGI is crucial for a little LL looking to take on HB claimants.
If the law will NOT expedite timely removal of HB claimants who refuse to vacate once they stop paying rent then RGI is the only real solution to non-payment of rent.
Even this new RGI policy still has 2 months of policy excess.
So a LL would still face losing 2 months of invarably unrecoverable rent.
A tenant who passes a normal RGI policy which I have with NO policy excess encourages me to take on the non-LHA tenant.
If they can change the homlessness regulation then it would be easy to amend the law on eviction in the situation only of non-rent payment.
The reason LL won't take these tenants on is they know how long it will take to evict and the losses will never be recovered.
I would be £6000 down and bankrupted by now caused, by a private tenant on who I did obtain RGI.
The solicitor who are acting for and being paid for by the RGI company are working as efficiently as they can.
Even so they state it could be up to 5 months to evict.
Last time I was paid rent by this former PRS tenant was April 2012.
So possibly £10000 would have been paid out by the time she is evicted.
Plus once evicted, if she has trashed the place; which is unlikely, then I receive another 2 months of cover.
Cost for this service..................................£99.00
I want RGI on ANY tenant type because the EVICTION law is so useless.
With HB claimants there is the problem of claims being suspended and clawback if direct payment is received.
These problems haven't gone away.
They are the same.
It is the poor old LL and HB claimant that are victims of the useless system.
If councils wish to bring LL onside then they will have to come up with solutions that GUARANTEE the LL will recive the LHA agreed irrespecive of a tenant's change of circumstances.
Obviously a council would advise that they would not be paying anymore and then a LL could commence eviction proceedings.
But the LL would need to be paid directly without any fear of clawback.
The LL only provides accommodation on the basis of the council advising what LHA the tenant is entitlked to.
If this turns out to be false that should be the council's problem and NOT the LL.
These are some of the reasons that LL won't take on LHA claimants.
Though I should say that the larger more professional LL can manage better these issues as they have processes in place and the cashflow to cover problems.
SMALL LL do not have this luxury and need protective measures like RGI.
You have repeatedly heard these arguments and know what is required.
Councils just don't seem to get it!!
Or perhaps they do and perhaps NOW they are being forced into the LL way of thinking.
All a council would have to do is guarantee that they will pay LHA if agreed at the outset of a tenancy and if it turned out that the claim was not valid the council would pay the original LHA amount til evicted and assist the LL to evict the tenant.
For councils to state when a tenant fails to pass on LHA to a LL; 'it is nothing to do with us guv, it is betwen you and the tenant'; is a major reason why LL do not wish to rent to LHA claimants.

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