Regulator warns of “fundamental issues” with some lease-based provision of specialised supported housing
The Regulator of Social Housing (RSH) has warned that “very few” lease-based landlords are delivering specialised supported housing in a way that consistently delivers the outcomes required by its regulatory standards.
In a report published today (10 April), the regulator acknowledged that some landlords are exposed to a significant number of risks as a result of long-term and inflexible lease structures, which can lead to poor outcomes for tenants.
Specialised Supported Housing (SSH) is a type of supported housing designed or adapted for people who require specialised services so that they can live independently rather than in a care home.
In lease-based SSH provision, a freeholder owns the property and leases it to a private registered provider landlord on a long-term basis (at least 10 years and often longer).
The private registered provider landlord then lets the home to an individual tenant, usually put forward by a local authority or care provider.
As part of the exemption criteria for SSH, the private registered provider landlord must ensure the home is designed or adapted to meet the tenant’s needs that the care provided through the agreement is “approximately the same as a care home”, the regulator noted.
However, the RSH's report highlighted the following issues:
- The imbalance of risk and reward between the social landlord that leases the property and the freeholder that owns it. Social landlords generally pay inflation-linked leases for at least 10 years, which absorb a large part of their rental income despite carrying substantial responsibility.
- Limited capacity to manage risks, ongoing repairs and maintenance, and void periods when the property is empty and no rent is paid.
- Weak governance, with some boards not understanding the scale of their lease liabilities and not challenging these arrangements at the outset.
- Some landlords taking on a large number of homes without understanding the needs of tenants or the homes they live in. This can lead to poor outcomes for tenants and landlords incorrectly claiming rent exemptions to meet their lease payments.
The regulator concluded that there is not enough flexibility in current lease terms for landlords to “manage risks effectively”, noting: “for the model to be sustainable and to protect tenants’ homes, landlords are going to have to address the issues raised in this report and this may need further negotiations with the freeholders.”
Jonathan Walters, Deputy Chief Executive of RSH, said: “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. 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.
“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.”
Lottie Winson
