Providers in sub-sector engaged in financially risky practices, says RSH
Many landlords involved in lease-based provision of specialised supported housing are not well run, according to the Regulator of Social Housing (RSH).
In a report published today, the RSH said it had found significant and ongoing issues with some landlords in this part of the sector over a number of years.
Providers in this sub-sector lease properties on a long-term basis to provide specialised housing for people with complex support needs, offering assistance similar to the level provided in a care home but with residents continuing to live independently.
Poor practices among such providers have resulted in providers becoming financially distressed or insolvent, and in some cases “severe” conflicts of interest have resulted in landlords taking on unfavourable lease terms and unsuitable homes from freeholders.
“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,” said Jonathan Walters, deputy chief executive of the regulator.
“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.”
The RSH said social landlords generally pay inflation-linked leases for at least 10 years, which absorb much of their rental income.
It also cited limited capacity to weak governance, with some boards not understanding the scale of their lease liabilities, as well as problems with landlords taking on a large number of homes without understanding the needs of tenants.
“This can lead to poor outcomes for tenants and landlords incorrectly claiming rent exemptions to meet their lease payments,” it added.
“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,” said Walters.
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