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Maximum Services Charges in a Hostel

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Community Advice Services Association

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Joined: 6 May 2018

I am conducting some research, any help would be much appreciated.  Do LAs publish the amounts they consider to be reasonable in respect of hostels CSS, service charges and rent. I have been given a ball park figure of approximately £230.00 per week as a maximum. Is this figure about right or if not what amounts are we looking at for say homeless hostels or halfway houses?.  In the annals of history LAs used to have a designated officer who dealt with such matters. S/he was the go to guy. Are LAs likely to still have one or is it on a deal with when it arises basis with nobody specialising in the subject?

HB Anorak
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Benefits consultant/trainer -, East London

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You will probably find that authorities are reverting to having one person or a few people dedicated to supported accommodation.  It’s eventually going to be more or less all that remains of working age HB and it seems to be a growth area for various reasons.

It is very difficult to have a “one-size-fits-all” tariff of charges though.  Authorities are much more inclined these days to seek evidence of the specific running costs of a particular project in the form of staff wages, furniture and white goods replacement, servicing contracts etc.  And just the basic property rent - the “core rent” as it is often called - can vary hugely depending on the region, how the property is held by the provider (owned or leased, mortgage or no mortgage etc), whether the accommodation is self-contained or just a room in a hostel/shared house.  Local authorities would certainly find life easier if providers had to work within maximum amounts for various items, but they would not be able to defend across the board limits at Tribunal because the regs require reference to be had to the cost of suitable alternative accommodation for the individual claimant.

The best advice for providers is to work out what they think they need to charge, make sure they keep detailed evidence of expenditure, and set their charges according to their known costs.

There are some issues that councils find especially troublesome at the moment and those are:

- lease charges payable to investment companies who acquire property and lease it to housing associations for what are often in my opinion beyond unreasonable rents: utterly preposterous amounts of money
- the extent to which intensive management costs are eligible to be covered by HB: how do you draw a bright line between property management and personal support?

Neither of those issues is particularly prevalent in single homeless/move-on types of accommodation that you are interested in though.

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Housing Benefit & Hostel Income Advisor - The Salvation Army, London

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All the local authorities we deal with have a designated officer or manager responsible for making eligible rent decisions in supported accommodation.  There may also be a team alongside them administering claims, depending on the size of the authority. 

I’ve never come across any published rates for eligible or ineligible charges in supported accommodation and CCS is often commercially sensitive if contract tenders are involved.  Generally speaking, our rates get scrutinised as follows:

If below LHA, very little concern by local authority (only happens in limited areas with high LHA rates)
If overall rent increase below inflation, very little scrutiny
If eligible service charges or gross rent increase above inflation, then explanation of service charge calculation required (sometimes including evidence of previous years or projected expenditure)
In new schemes all charges to be justified, including information on how the core rent has been set and the amount of CCS that client’s receive (though not the cost)
Supported accommodation owned by a housing association receives far less scrutiny due to more favourable subsidy arrangements

Charges vary significantly depending on the scheme - housing management model, staff costs, size of hostel, client group, etc.  As a guide, local authorities do compare supported accommodation costs in their area when deciding eligible rents, but these factors mean a like-for-like comparison is sometimes difficult.  My impression is that local authorities find it easier to restrict individual service charges rather than find the overall rent unreasonably high.