A ‘wild west’ of the housing sector must be reformed to stop landlords exploiting vulnerable people, ministers have warned.
Senior Tory MP Bob Blackman has proposed a change to the law to strengthen regulations for shared accommodation for people leaving prison, women who have fled domestic violence, recovering drug addicts and others.
Exempt subsidized housing is meant to provide vulnerable people who have nowhere to go with a place to live where they are also visited by carers.
But Mr Blackman said a growing number of “unscrupulous” landlords are offering their properties as tax-exempt accommodation, leaving people without adequate care and turning entire neighborhoods into “ghettos” of substandard shared homes.
Charities have previously warned that a growing number of accommodation providers are trying to ‘exploit’ vulnerable residents for their cash housing allowances.
There are currently no regulations on supported exempt housing, and the MP for Harrow East has tabled the Supported Housing (Regulatory Oversight) Bill to create oversight of the sector.
He told the PA news agency: ‘Across the country, but particularly at the moment in Birmingham…we have a position where there is what I would describe as a Wild West spectacle.
The MP recently took part in a cross-party committee field trip to the city to see first-hand the problems in the sector and is worried about “the conditions people are then being forced to live in”.
He added: ‘We have a problem here, in the sense that you could have, if you have an unscrupulous supplier, you could have a position where you have someone who has been released from prison and who is a former offender , you may have a wife fleeing domestic violence, you may have someone who is a recovering drug addict, someone who is a recovering gambling addict, someone recovering from other addictions or other problems, all in the same household, with no checks and balances.
“Obviously that puts these vulnerable people in an even more vulnerable position overall.”
Mr Blackman said tenants in some shared homes claimed the support they were supposed to receive from carers amounted to “sending someone once a week” to simply check on them, adding that people “were only receiving in no help in rebuilding their lives in any way, shape or form”.
He added there was a ‘perverse incentive’ for housing providers to keep people on housing benefit rather than helping them ‘rebuild their lives’ as this would end the rental income provided by their Housing allowance.
He warned: ‘What’s happening in places in Birmingham now is that you see literally every house on the street being taken over by unscrupulous landlords who step in, buy the properties, expand them…and then transform them into exempt housing, and suddenly you’ve got a ghetto of people who are in that unfortunate position.
MPs debated solutions to growing problems with tax-exempt accommodation in Birmingham in February, but Mr Blackman said there had been “many examples” of similar situations across the UK since then, including in London.
He added: “Obviously property prices in London are much higher than elsewhere, which then means there is even more pressure on landlords, if they buy properties in London, to exploit them even more.”
Mr Blackman said he was in favor of giving local councils ‘lightweight’ new powers to regulate exempt supported accommodation, but added they would ‘require resources’ to oversee it.
The accommodation is qualified as exempt because it is not subject to the cap on housing allowances.
In a report published last year, the national homelessness charity Crisis said that “exempt provisions of Housing Benefit allow landlords to collect rents higher than the norm for social housing or even private.
He added: “While there are legitimate reasons for this – running supportive housing is more expensive than running mainstream housing – we see unscrupulous agencies exploiting loopholes in the regulatory regime to claim higher levels of benefits while providing minimal levels of support.”
The charity estimates there has been a 62 per cent growth in the number of exempt homes across the UK since 2016, with 95,000 cases recorded in May that year rising to ‘around 153,000’ in 2021.
Mr Blackman’s bill is due to be considered by MPs for a second reading on November 18, but is unlikely to become law without government support.
A government spokesperson said: ‘While there are many excellent supported housing providers, we know there is a minority who shamelessly take advantage of vulnerable people, and we are taking urgent action to end this practice.
“We recently announced new laws to crack down on rogue landlords, protect residents and give councils stronger powers to intervene.
“This is supported by a £20m investment to help councils raise the standard of supported housing.”