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NAO: Landlords Exploiting Tenants in Substandard Housing

The National Audit Office has uncovered a troubling trend of increasing numbers of landlords profiting from renting inadequate housing to vulnerable individuals, according to its latest findings.

The spending watchdog highlighted gaps in regulation that allow property owners to take advantage of the situation by offering expensive and sub-standard supported housing without providing necessary support, supervision, or care.

In Great Britain, there are approximately 650,000 supported homes, primarily catering to older adults in sheltered accommodations. However, this type of housing should also offer supervision and care for recovering drug addicts, former prisoners, homeless individuals, and victims of domestic abuse. Unfortunately, some unscrupulous landlords find it appealing due to its exemption from normal limits on housing benefit payments, allowing them to charge high rents.

The Commons select committee on levelling up, housing, and communities referred to the current system, which generates £3.5 billion annually, as a complete mess, describing the landlords’ activities as an exploitative “gold rush.”

Previous reports by The Guardian revealed that criminals purchase properties and establish them as supported accommodations but fail to provide adequate support. This unscrupulous practice can result in gangs earning hundreds of thousands of pounds each month, as confirmed by West Midlands police.

The National Audit Office’s report highlighted specific areas like Birmingham, where an increasing number of landlords bypass regulations to profit from providing costly sub-standard housing with minimal or no support, supervision, or care.

During inspections conducted between April 2019 and January 2022, Hull city council identified 323 severe hazards and immediate health and safety risks out of the 345 supported housing units inspected.

Birmingham city council, between April 2019 and September 2021, managed to recover £3.6 million in fraudulent overpayments made to supported housing landlords.

Meg Hillier, Chair of the Commons Public Accounts Committee, called on the government to support local councils in addressing the issue caused by regulatory gaps, emphasizing the significant expense to taxpayers. Hillier stressed that vulnerable individuals deserve housing that adequately meets their needs.

Currently, no single organization is fully responsible for overseeing supported housing. While local authorities have the power to inspect properties and challenge claimed housing costs, they often lack the necessary resources for effective oversight. Additionally, not all providers must register with the Regulator of Social Housing. The Charity Commission regulates charitable providers but does not inspect the housing quality, focusing solely on personal care. The Care Quality Commission also concentrates on personal care and does not assess the accommodation’s overall quality.

Recognizing the problem, the Department for Levelling Up, Housing and Communities has provided £5.4 million to local authorities in Birmingham, Blackburn with Darwen, Blackpool, Bristol, and Hull. These funds aim to test enforcement measures that improve the quality and value for money in supported housing. Furthermore, a minister announced plans last year to address the issue of a minority of landlords charging high rents for poor-quality accommodation without providing adequate support.

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