The end of supported living?

Registered Providers of Social Housing (RP’s) perform a vital role in delivering essential affordable accommodation.

Recent changes in governmental fiscal policy require RP’s to reduce all social housing rents by one percent over four years, which is a major departure from previous CPI (Consumer Price Index) linked increases. A cap on Local Housing Allowances (LHA’s) was also made.

After RP lobbying, a temporary one year rent cap exemption was granted for certain accommodation including supported housing. The introduction of the LHA cap has also been delayed.

During this period the government will conduct a review into the impact of the changes, consider key questions relating to the treatment of service charges and the ability of RP’s to de-pool the service charge from rent. Specialist supported accommodation naturally attracts higher service charge requirements.

Impact

The changing regulatory landscape has made an immediate negative impact on the delivery of social housing and potentially left certain specialist types of accommodation unviable.

Surplus generated by rental income funds future developments and maintains existing facilities, whether through leveraging the income stream or otherwise.
The need for significant savings to plug the income shortfall may result in job cuts and the abandonment of previously deliverable (and much needed) projects. Certain non-core services may be withdrawn or existing facilities closed.

Some RP financial viability ratings have been downgraded due to uncertain exposure to risk.

Reduced delivery of specialist facilities will increase the burden upon the NHS. The regulatory changes are also at odds with the government’s commitment to the delivery of additional residential accommodation, including affordable properties. The temporary exemption gives breathing space, but does little to remove uncertainty surrounding income streams and has left RP’s unable to spend grant funding awarded under the Care and Support Housing Fund.

Positive outcomes

The best outcome would be the grant of a permanent exemption to specialist areas of accommodation or to scrap the caps.

To regain control and safeguard their position, some RP’s have taken innovative steps to protect services through the acquisition of private equity investment, relieving the pressure to generate higher surplus levels. They are also delivering schemes and services through non RP status entities, to maintain freedom of governance and to best meet housing needs.

Many RP’s are facing difficult decisions on existing projects, which may not survive the delays of the review. The need for affordable rented accommodation and supported living (including extra care) facilities will not subside in our ageing population. All service providers should take stock of their current exposure, ability to achieve objectives and take decisive action to control their own destiny.

We are working closely with our clients to achieve positive outcomes. If you have any questions or believe we may help you in this way, please contact Simon Baxter at Simon.baxter@primaslaw.co.uk.