Unscrupulous providers harboring vulnerable people making ‘excessive profits’ in taxpayer-funded ‘gold rush’, MPs warn

Unscrupulous providers accommodating vulnerable people are ‘making excessive profits by taking advantage of loopholes in a taxpayer-funded gold rush’, MPs have warned.

A damning report calls for changes to the provision of exempt housing, a form of supported housing funded by housing allowances – with MPs saying there is ‘a license to print money to those who want to exploit the system”.

The Upgrading, Housing and Communities Committee (LUHC), which has been carrying out a months-long investigation into exempt housing, recommends the government publish national standards as part of a series of changes.

The select committee’s inquiry “heard of squalid environments, vermin, drug use, criminality and abuse”, according to the report.

“We have heard of people with a history of drug abuse being housed with drug dealers and domestic violence survivors being housed with perpetrators of such abuse,” he says.

“The support offered is sometimes little more than a loaf of bread left on a table or a support worker shouting at the bottom of the stairs to check on residents.”

It comes after an investigation by The Independent and openDemocracy earlier this year found that more than £132million has been paid out in housing benefit since 2018 to rogue providers for exempt housing.

The figures, obtained under the Freedom of Information Act, cover 95 of England’s more than 300 local authorities – meaning the true total is likely much higher.

The LUHC committee report said: “In short, we will describe the exempt hosting system as a complete mess.

“There are many good providers, but at its worst the system involves the exploitation of vulnerable people who should receive help, while unscrupulous providers make excessive profits by capitalizing on loopholes.

“This gold rush is entirely paid for by taxpayers through housing allowances.”

Labor MP Clive Betts, chairman of the housing, communities and local government committee, said the findings were ‘shocking’


Under the regulations, exempt housing providers – who house people including women fleeing domestic violence, people leaving care, the homeless, people with substance abuse issues and people leaving prison – must be non-profit entities, such as housing associations or registered charities, providing “care, support or supervision”.

Exempt accommodation is not subject to a housing allowance cap, allowing providers to pocket higher rates.

But, according to the committee’s report, “rent should be capped at a reasonable level that covers the higher costs of running exempt housing”, adding that support funding “should be provided separately”.

MPs want the government to review applications for exempt housing allowances to determine how much is being spent and on what.

The committee calls on the government to publish the national standards within 12 months of the publication of their report, with powers for local authorities to enforce them.

“We also found that organizations without expertise are able to target victims of domestic violence and their children and do not provide specialist support or an appropriate or safe environment.

“We recommend that, where a potential resident of exempt housing is a survivor of domestic violence, there should be a requirement that housing allowance is paid only to providers who have recognized expertise and meet the … standards … of the Domestic Violence Act 2021.”

Michael Gove returned to role of upgrade secretary under Rishi Sunak


Labor MP Clive Betts, chairman of the LUHC, said: “While there are many good providers of exempt accommodation, the findings of our investigation into the state of exempt accommodation are shocking.

“The current system of exempt housing is a complete mess that is failing residents and local communities and ripping off the taxpayer.

“The government must act now to help councils deal with this and ensure people get the quality housing and support services they need to get on with their lives.”

In March, then-Street and Housing Minister Eddie Hughes presented plans to introduce minimum standards for resident support, along with changes to housing benefit regulations.

The package included giving local authorities in England new powers to, he said, “better manage their local supported housing market and ensure that rogue landlords cannot exploit the system to the detriment of vulnerable residents and at the expense of taxpayers”.

Tory MP Bob Blackman, who is a member of the LUHC committee, introduced a private member’s bill in June to “make provision for the regulation of exempt subsidized housing; provide for provisions for local authority monitoring and enforcement powers relating to the provision of exempt subsidized housing; and for related purposes”. It is due to receive its second reading next month.

A spokesman for the Department of Leveling, Housing and Communities said: ‘It is unacceptable for unscrupulous landlords to try to profit at the expense of vulnerable people and we are proposing a package of measures to stop them in their tracks.

“This is supported by a £20m investment to improve the quality of the supported housing sector and protect the most vulnerable in society.”

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