After a concerted campaign by the sector calling for measures against rogue operators, we now have a law that will affect all providers of supported housing, how they operate, and their relationships with local authorities. It's called the Supported Housing (Regulatory Oversight) Act 2023 ('the Act'). Here, we explore what operators need to know.

What problem is the Act fixing?

The term 'supported housing' is used quite widely, notwithstanding a considerable variation in type and standard of accommodation. There has long been evidence that vulnerable people have been exploited in supported housing, with one parliamentary report calling the system "a complete mess". Simply put, supported housing is accommodation provided alongside support, supervision or care to help people live as independently as possible. Residents are typically vulnerable and may be older or have disabilities. Homeless individuals and families are also housed in this accommodation. The private rented sector (PRS) is an essential part of supported housing, alongside councils, registered providers of social housing and voluntary organisations.

Much supported housing qualifies as 'exempt accommodation'. Supported exempt accommodation means the rent levels are not subject to the Benefit Cap in welfare regulations, because this type of accommodation usually has higher running costs. Therefore, operators of supported housing can set higher rents and still recover through housing benefits. Historically this has created a perverse incentive for rogue operators to offer supported housing to make a profit on higher rents, but without providing any or adequate care, support or supervision to the vulnerable residents being housed. Sadly, there have been many such cases, and they have attracted attention in the national housing sector.

A campaign led by the charity Crisis, 'Regulate the Rogues', drew attention to instances of abuse of exempt accommodation, where landlords were exploiting the system for profit while leaving people in unsafe, dangerous shared housing with little to no support.

Until now, there has been no dedicated licensing scheme to ensure that accommodation for vulnerable people is maintained at a high level. The Act changes this, with the hope that rogue operators will be forced to leave the market. However, responsible operators will be subject to the same level of scrutiny and compliance, so they must now prepare for the changing landscape.

What are the fundamental changes?

The Act introduces a whole new infrastructure of standards and regulations into supported housing. This marks a significant shift to inspection and enforcement by local authorities in relation to homes where vulnerable people live. The key points are:

  1. Creation of a supported housing advisory panel. Drawn from stakeholders in the housing sector (including registered providers and local housing authorities), this national panel will provide information and advice concerning supported exempt accommodation to the Secretary of State. In particular, the panel will raise matters that could significantly impact the provision of supported exempt accommodation.
  2. Local supported housing strategy. A duty on local housing authorities in England to review exempt supported housing in their local areas, including assessing supply and demand (which could mean a conclusion that demand is limited and so supply should be capped). Having carried out the review, the relevant authority will be required to publish a supported housing strategy by a date prescribed by the Secretary of State in regulations and at regular intervals thereafter. Social services will be required to assist in implementing the strategy.
  3. Minimum standards for supported housing. For the first time, national minimum standards can be set regarding the type or condition of premises used for the provision of supported exempt accommodation or the provision of care, support or supervision at supported exempt housing.
  4. Licensing of supported housing. The Act gives power for regulations to be made regarding supported exempt accommodation, and the local housing authority will be responsible for overseeing standards in its 'designated district'. Between 2020 and 2021, licensing pilots were implemented in Birmingham, Blackburn with Darwen, Blackpool, Bristol and Hull, using enforcement to improve the quality and value for money of supported housing. Licensing can cover the following:
    1. Accommodation standards
    2. Accommodation uses
    3. Carrying out assessments of the needs of residents (or potential residents) and relating to the conduct of such assessments
    4. Provision of care, support or supervision
    5. Compliance with National Supported Housing Standards
  5. Enforcement of standards. Financial penalties can be levied against operators and the people who have control over/manage the accommodation; banning orders can also be obtained.
  6. Planning use class. If the Secretary of State considers that the licensing regime has failed to improve standards, there is an option to specify exempt accommodation as a use class requiring planning permission in some circumstances.
  7. Information sharing. There will be power to require information sharing about supported exempt accommodation, but only under existing data protection legislation.

This sounds too good to be true – is it?

This feels like a watershed moment for part of the sector that urgently needs constructive attention and engagement if it is to serve vulnerable residents well. Certainly, much praise should go to Crisis for its efforts at getting this Act across the line.

However, as with any system of regulation, there are now compliance issues for operators to grapple with. For example:

  1. Some operators may be too small for the administrative and financial cost of licensing and regulation – this could inadvertently push good operators out of the market.
  2. Some operators could provide 'support, care or supervision' to minority groups, and there has already been some concern that this type of engagement may not be recognised within the new national standards.
  3. Any operator, regardless of size, will now have an extra administrative layer to deal with to get up to speed with licensing requirements.
  4. Given the importance of the national panel, it is of concern that the membership is limited to institutional players rather than the ;PRS and voluntary actors. This could limit its effectiveness.
  5. As always, it's a question of 'show me the money' – standards are only as effective as their enforcement, and local housing authorities are already overburdened. Time will tell what support they are given to carry out their crucial new role in this sector.

Next steps for operators

The Act is now in force, but the real detail of the standards that operators have to meet is still expected in secondary legislation – so operators should keep an eye out for further legislative updates.

There is a broader view on supply and demand for entrants to the market, particularly given the role of local supported housing strategies and the possibility of a new planning use class. Operators should be paying close attention to these developments, as they may fundamentally discourage the creation of new supported living in certain areas.

Furthermore, the Government has affirmed its intention to change housing benefit regulations to try and define 'care, support and supervision'. This will be of interest to operators who must meet this definition to keep drawing down benefits for rental payments. The proposed changes of 'care, support and supervision' in regulations have yet to be announced.