Organised crime groups are taking millions of pounds of taxpayers’ money through unregulated supported accommodation for vulnerable people, police have revealed.
Criminals have been cashing in on the recent boom in “exempt accommodation”, designed to support vulnerable people such as prison leavers, recovering addicts and those fleeing domestic violence.
Providers can claim higher rates of housing benefit for these properties, but there are major concerns about the quality of support.
Police say that criminal gangs are buying properties and setting them up as supported accommodation to receive the higher rates, but provide little to no support for the vulnerable tenants.
“Organised crime groups we know are making in excess of half a million pounds a month from this, and that’s taxpayers’ money, a huge amount of money,” said assistant chief constable Richard Baker from West Midlands police.
“A lot of the organised crime intelligence that we’ve got shows that crime groups will invest money, will launder their money, through the purchase of this type of property.”
Exempt accommodation can charge higher rates of rent – paid by housing benefit – as it is exempt from local housing allowance (LHA) caps and is supposed to provide a “more than minimal” level of support for tenants.
Birmingham has become a UK hotspot, with the number of claimants in the city rising from 3,679 in 2014 to nearly 22,000 earlier this year. The city council estimates at least half of those claimants have travelled to Birmingham from other local authorities specifically to stay in exempt accommodation.
But the lack of regulation and oversight of the sector has left it open to abuse, with multiple reports of unscrupulous providers exploiting the system to make money, and failing to provide support for tenants with complex needs.
“We’ve heard of some instances where they put a loaf of bread and some jam on the table in the morning, and that’s it. That’s the support,” said Baker.
“There are multiple examples where providers will take one of the vulnerable individuals from inside the premises, reduce their rent, and then say that they’re employed as a support worker, with no training, no checks.”
As a result, crime and antisocial behaviour plague many of the properties. “We’ve got examples of single properties causing us several hundred calls over a period of months,” Baker said. “In some areas, whole streets have been taken over by it.”
There were 156,868 households in exempt accommodation nationwide as of May 2021, according to figures by the homeless charity Crisis, with numbers growing particularly in areas like Hull, Bradford and Blackpool.
Jasmine Basran, policy and public affairs manager at the charity, said they have come across many vulnerable people who have been exploited while living in this accommodation.
She said Crisis has heard of people using controlling tactics, such as “effectively standing guard in the accommodation, asking for money, and not letting people out at certain times”, to prevent residents from getting a job and moving away.
“It’s people taking advantage of people in this situation, because there is no oversight, there’s no one checking, there’s no one there to report safeguarding concerns, so they are exploiting the situation,” she said.
“We’ve heard of people who felt safer sleeping on the streets.”
Earlier this year the Levelling Up, Housing and Communities select committee launched an inquiry into the issue, while then housing minister Eddie Hughes announced plans to introduce minimum standards of support provided to residents.
Hughes also said measures would be introduced to give local authorities more power to control exempt accommodation in their area.
Birmingham city councillor Sharon Thompson, the cabinet member for housing and homelessness, said the government had done a “spectacular U-turn” after previously dismissing the subject as a “Birmingham and Blackpool issue”.
“It takes up a huge amount of time and effort, and we now have specialist officers that almost work solely on exempt accommodation,” she said.
“But the council’s powers over this are completely limited. Over the last two years of campaigning we have crafted a really clear wishlist of things that we think the government needs to change in order to improve the market. And giving councils more control is part of that.”
Birmingham Labour MP Preet Gill, who last year successfully campaigned for exempt property Saif Lodge in her constituency to be closed down over its “filthy, cramped and poor-quality” conditions, said there are many more that still need tackling.
“Here we are, we’re saying to landlords, they don’t need any background, they don’t need to evidence any skill set in order to respond to the concerns that many of these people have, whether that’s drug and alcohol concerns or mental health issues,” said Gill.
“Of course, you do have good providers as well. But it seems that people are happy to take the money for the support element without actually providing it because they know there is this loophole where they don’t have to even evidence what they’re doing.”
