Excessive rents and extra care support schemes

HA in our area recently built new extra care scheme and will be moving in tenants who will need HB to afford rent charged.

HA had sent details of the likely rent to LA/ HB section concerned - initial response from them was that the proposed rents would be allowed apart from usual ineligible service charges - we have been giving would be tenants HB estimates based on this to try to ensure they can afford to move into the new scheme

LA/HB section now decided that the new scheme rents are excessive and that a referral to the RO is next course of action

The rent for the new extra care scheme for a 1 bed property is £236.29 pw, LA/HB section are comparing this to another local (established)  extra care scheme 1 bed property rent which is £170. 66 pw ( for further comparison LHA rate for 1 bed prop in our area would be £151.50 pw) so a difference of £65.63 pw

The HA have argued that the new scheme rents are in respect of “affordable” properties (as opposed to the comparator scheme which are “social rented” properties) - affordable rents having been set out as per the section 106 agreement with the LA concerned (and using the HCA approved method for calculating affordable rents in extra care schemes) and that this method has been used (rather than the usual method of calculating general needs affordable rents) as there are no “open market comparable products”. 

Anyone had any experience of this (including any appeals made against HB awards based on RO determinations)?

Don’t worry about the Rent Officer valuation - it’s a distraction in the HB decision and a financial risk to the authority.  The Council is in a difficult position: if they consider a registered HA rent to be unreasonably high they must refer it to the RO.  The RO will provide a “drive by” bricks and mortar subsidy valuation that takes no account of the higher management costs of supported accommodation and is therefore likely to be less than the 1-bed comparators the Council is looking at. But, because this is exempt accommodation, the Council can only restrict the rent as far as Reg13 allows having regard “in particular” to the cost of suitable alternative accommodation.

There is a very pertinent recent Court of Appeal decision between Birmingham Council and a supported housing provider (see RN summary http://www.rightsnet.org.uk/welfare-rights/caselaw/item/court-of-appeal-rules-that-unreasonably-high-rent-determinations-for-privat.

On the whole the decision is helpful to the Council in a situation like yours, but there are aspects of it that the claimants could rely on too.  The main point is that the Council does not need to worry too much about why the suitable alternative accommodation it looks at is cheaper than the claimant’s - all that matters is that it is cheaper and it is suitable.  Therefore the fact that the cheaper properties the Council has looked at fall under the legacy social rent regime and not the more recent affordable [sic] rent system does not provide the claimants with grounds for appeal per se.  However, the Court in the Birmingham goes on to say that the amount of the reduction under Reg 13 is at the Council’s discretion - they don’t have to go all the way down to the cost of suitable accommodation if they see compelling reasons why the claimant’s rent should at least be a bit more than that.  That provides a way to level the playing field between different funding regimes.

Finally, as most if not all of the tenants will be over SPC age and/or have LCW the Council may only restrict the rents at all if it can show that there is suitable alternative accommodation available within a reasonable time.  That will require some analysis of turnover in the comparator schemes - even if all of the other schemes the Council has looked at were to freeze allocations to anyone except the tenants in the new scheme, how long would it realistically take to clear out the new scheme and see them all adequately housed?  And in real life that isn’t going to happen - these people would have to join the others seeking tenancies in the alternative schemes.  When I have worked on cases like this for local authorities I have come unstuck on the availability point.  The more tenants in the new scheme have their rent restricted, the less available that makes the alternative accommodation.  If you double demand for what is already a scarce resource it will not be available quickly enough to satisfy Reg 13.

Many thanks Peter

Someone has just queried my assumption that the project is necessarily exempt accommodation, which is a fair point: I should add that it is only exempt accommodation if the HA itself provides support, or arranges for someone else to do so on its behalf.  If the HA is not providing or directing provision of support, HB will be limited to the Rent Officer’s Local Reference Rent.

Many tenants in extra care schemes will have personal care commissioned from a third party by adult social care, which is not the HA’s responsibility, but there will usually be additional support in the form of warden welfare checks, social events and a more hands-on approach to management and if (i) these are done by or on behalf of the HA and (ii) the Council is satisfied the activities are more than minimal it will be exempt.

Thanks for the update Peter - HA is providing support.

My concern at moment is (now being aware that the RO will be involved) what would a sensible approach be as to what eligible rent figure should be used for any clients who approach us for a HB estimate. This new scheme is expected to open in January / February 2017 and HA is in process of contacting prospective tenants some of whom are contacting us for HB estimates to check they will be able to afford the rent - most of these I have seen to date are eligible for max HB in current home and will be eligible for same in new scheme as they are on pass porting benefits like PGC