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Deposit Guarantee Schemes in Scotland

SECTION FIVE: THE LOCAL CONTEXTS

Introduction

5.1 Each scheme developed a specific package of services in order to meet the needs of their client group, and also in response to aspects of the local context in which they operated. This section considers two principal elements that had an impact on scheme operation: the administration of housing benefit and the local housing market. A final element of scheme evaluation is also presented, in the survey findings from local agencies that were likely routinely to refer to the schemes.

Housing benefit

5.2 As has been noted, the majority of clients who secure tenancies through assistance from deposit guarantee schemes used housing benefit to pay some or all their rent. The reliance on housing benefit introduced two problems that impact on schemes in different ways, depending on local circumstances.

5.3 First, housing benefit presented difficulties relating to the affordability of rented property for scheme clients. The introduction of the reference rent system means that for some clients, there was a shortfall to pay between the 'market' rent allowed by the benefit system and the actual rent being asked for by the landlord. In some areas there was a good 'fit' between the benefit payment and the rent. However, most of the schemes reported that their clients had to pay some sort of top-up. Payments of 20-30 a month were common, and had to be met from the client's income support payment. In a housing market where properties were in oversupply, it was possible for schemes to persuade some landlords to take on scheme clients as tenants and not ask for a top up payment. Schemes noted that their being able to offer continued monitoring of the property sometimes acted as further persuasion.

5.4 For young people under the age of 25, the operation of the single room rent (SRR) means that one-bed property was not to be affordable, unless the property comprises bedsit accommodation with shared facilities. The East Dunbartonshire scheme indicated that in their area, the single room rent payment was 39 for all young people, whilst single person rents were, at cheapest, 75. Most schemes said that they were only able to offer extremely limited assistance to young people, because of the SRR. It was felt to be unproductive to place a young person in a property where the top up was too high to be affordable over the medium and long term, and alternative housing options were sought.

5.5 A reliance on housing benefit also restricted the supply of properties to tenants, since landlords are generally unwilling to let to people on housing benefit. This was certainly the case in areas where demand for properties was buoyant, and landlords could readily find tenants who were working. The problem of property supply again was particularly marked for young people, since the operation of the SRR meant that essentially their search for property was restricted to looking at shared houses and houses in multiple occupation. In Scotland, the introduction of mandatory licensing of HMOs has introduced a policy 'mismatch' since statutory authorities in particular felt unable to use HMOs that had not been licensed, which further restricted the housing options of young clients. One scheme reported that their area contained just one licensed HMO.

5.6 Attempts to circumvent difficulties created by the housing benefit system were extremely variable in their effectiveness. With regard to affordability, some schemes were able to apply for discretionary hardship payments for their clients, to cover the top up costs at least for a thirteen-week period. Use of the discretionary payment for young people approaching their 25 ^th birthday was mentioned by more than one scheme. As the name of the benefit indicates, the payment is discretionary, and not all schemes were able to make use of this option. In one area, the administration of the discretionary payments was extremely slow - delays of six months were common - but the benefit office had agreed to begin payments to applicants that came through the scheme on the understanding that they would be eligible once the paperwork had been processed.

5.7 In an attempt to increase the supply of property to their clients, the majority of schemes presented their services to the landlord in such a way that the landlord would be persuaded that problems had been minimised. Thus, in areas of slow housing benefit administration, schemes offered a rent in advance payment, so that the first month's rent was covered. The fast-tracking of benefit processing was often sought but it was not always the case that a scheme could forge a good relationship with their local housing benefit office, and even local authority schemes could have problems with the frequent return of applications requiring amendments. However, most schemes could offer a monitoring of the property for the landlord, which meant that difficulties relating to overpayments would not occur, since the scheme could inform the landlord immediately if the tenant left the property without notice.

5.8 It remains the case that in the very worst scenarios of a slow housing benefit administration coupled with the common incidence of high top-ups, schemes evidently required added resources in order to offer greater incentives to landlords (rent in advance, tenant support), and to cover the costs of the extended development work that was required to 'woo' the sector into accepting housing benefit claimants.

The local housing market

5.9 As has been indicated in the report introduction, the private rented sector in Scotland varies in size from area to area, and schemes were operating in very different market conditions. Schemes in some areas - including Aberdeen, North Lanarkshire and Edinburgh - reported that properties were in good supply, and tenants were having little difficulty locating somewhere to stay. Indeed, for one of these schemes a principal difficulty was affording staff time to gather information on the available tenancies.

5.10 By contrast, the majority of schemes indicated that the local housing market presented difficulties with respect to housing clients. For example, South Ayrshire and Stirling both indicated that property generally was in limited supply, and house prices had recently increased substantially. A consequence was heavy demand for property in the PRS, a situation that was exacerbated by the existence of a large student population also looking for property to rent. Dundee similarly had a problem with regard to a limited supply of properties in the PRS coupled with a high student population; as a consequence the scheme had been unable to accommodate more than a handful of tenants in the past few months. In Glasgow it was reported that the number of landlords willing to let to housing benefit claimants was low, thus effectively reducing the PRS available to scheme clients.

5.11 Both the Dumfries and Galloway and the West Dunbarton schemes reported that property quality could be a problem in their areas. In Dumfries and Galloway, bedsits were available in the towns but standards were low. Similarly, in West Dunbartonshire standards were also low, but still offered a better option to tenants in terms of location compared to the council stock in which voids were commonplace.

5.12 The PRS in rural locations presented its own distinctive problems for scheme managers. To some degree, the nature of private lets in rural areas tends to follow more informal arrangements. Letting may be of single, previously tied, properties on estates, and lets were more likely to go to people known to the landlord or the estate manager. In addition, the letting process was hidden through the use of solicitors rather than letting agents. This problem was particularly acute in Shetland, where the local authority reported that attempts to get a scheme up and running had been stymied by the informal nature of the local market. Lets were arranged through word of mouth, and landlords tended not to use formal tenancy agreements. In Aberdeenshire, it was reported that in very small communities, attempting to find properties for given individuals could be difficult, since they may be known locally as having problems. The whole process had no protective anonymity for the client.

5.13 The scheme's impact on local markets varied substantially purely with respect to the number of landlords and agents that were involved in letting to scheme clients. Some of the larger schemes, such as Edinburgh and Fife, were dealing with over fifty landlords at any one time. The numbers of landlords involved evidently did not preclude the scheme establishing a close working relationship with individual landlords, especially when they had more than one property let through the scheme, or routinely returned for new tenants as particular tenancies came to an end.

5.14 Schemes often 'sold' themselves in terms of the advantages that they could offer to landlords, so offsetting a general reluctance to let to clients reliant on housing benefit. Many of the schemes noted that they had formed good relationships with local landlords, and as time passed, many landlords returned to schemes when properties became available. Schemes noted the importance of establishing an impartial stance in terms of acting purely in the interests of the tenancy continuing satisfactorily, with no obvious bias towards tenant or landlord. Other selling points included the delivery of services to the landlord that might be charged for by a commercial agent, such as vetting tenants, setting up tenancies and monitoring the tenancy. These sorts of services were deemed to be particularly important to offer to small or new landlords who appreciated the availability of advice and guidance. In addition, the scheme could offer one unique opportunity: the chance for the landlord to help someone who was homeless. It was felt that some landlords liked the fact that they could give help within a context that reduced any concomitant risk.

The local homelessness 'network'

5.15 The majority of schemes said that reference to their work was included in the local homelessness strategy. Overall, awareness of scheme work amongst housing strategy and homelessness officers in the ten network survey areas was good. However, the centrality of schemes to the delivery of services for homeless people varied. In some areas (for example, Aberdeen) referrals to the scheme from agencies such as housing advice centres, CABx, social services and hostels were routine, and strategic liaison took place at managerial level to ensure service co-ordination. In other areas - for example, Glasgow - it was clear that the scheme was viewed as a small agency compared with the substantial homeless problem in the area. Still, the scheme was valued by the agencies that routinely referred clients.

5.16 In all, a common complaint was that schemes could be more effective locally if they expanded the services that they offered to include families. Agencies dealing with young people also often said deposit help would be useful for their clients, since access to social housing was either limited or would require a long wait.

Table 5.1: Summary comments from Network contacts

5.17 Comment about scheme's effectiveness often recognised restrictions that were enforced by the workings of the housing benefit system and by the nature of the rental market. For example, local agencies in Dundee and Dumfries and Galloway saw that scheme help would be restricted in those areas because of local landlord unwillingness to take people on housing benefit or deal with the schemes. In some instances, local homeless agencies themselves carried a preference for strategies that could get their clients into social housing, and simply did not want to use the scheme.

Conclusion

5.18 Scheme operation was very much constrained by the local contexts in which they operated, both in terms of housing benefit administration and housing markets. Landlord willingness to deal with schemes often rested on the nature of local housing benefit administration: a poor record locally of long delays in housing benefit processing could mean that landlords were highly resistant to taking housing benefit claimants, particularly if working tenants were in ready supply. The nature of the housing market also created a range of contexts, each of which could bring their own problems: an over supply of social housing could mean an unwillingness of local agencies to use the scheme; an undersupply of private rented properties could create long delays in housing clients which meant that referrals might dry up; high rents could carry the risk of creating unsustainable tenancies. However, in some areas where rented property was in good supply it was evident that schemes were able to offer a viable alternative to social housing, offering clients properties in good locations, off social housing estates reputed to have problems with drugs and violent crime.

5.19 Material collected from other agencies working in the ten network survey areas indicated the common view that schemes should expand their operation to ensure that this option was available as widely as possible, including families and young people. However, there was a contradictory understanding that in many areas the single room rent would mean that this opportunity was in reality worthless since the tenancies that could be created would not be sustainable.

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