SOCIAL LETTINGS AGENCIES IN THE

WEST MIDLANDS:

LITERATURE REVIEW AND TYPOLOGY

David Mullins and Halima Sacranie

March 2017

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Contents

1. Introduction and Background .................................................................................. 2

2. Can Social Letting Agencies (SLAs) help to provide a ‘new social housing’? .................. 3

2. 1 Context- The Growth of the Private Sector ............................................................................ 4

Figure 1: Rental Tenure trends over the last century ..................................................................... 4

3. Social Lettings Agencies – Some Definitions ..................................................................... 5

4. The Purpose of SLAs – Divergent Rationales .................................................................... 6

5. Typology Elements – Underlying Questions ..................................................................... 8

Table 1: Underlying Questions ..................................................................................................... 8

5.1 Lead organisations and sector characteristics ......................................................................... 8

Table 2 - Lead Organisations Types .............................................................................................. 9

5.2 Motivation and Rationale ..................................................................................................... 12

5.3 Business Models .................................................................................................................... 13

5.4 The Service Offer ................................................................................................................... 14

6. Gaps in knowledge ......................................................................................................... 15

Figure 2: A Typology of SLA Models............................................................................................ 16

7. The 4Ps Research Framework ......................................................................................... 17

Figure 3: The 4Ps Framework .................................................................................................... 17

8. Challenges and Opportunities ........................................................................................ 19

9. West Midlands Specific Issues ........................................................................................ 22

Bibliography ....................................................................................................................... 23

David Mullins and Halima Sacranie, Housing and Communities Research Group

University of Birmingham March 2017

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1. Introduction and Background

This report constitutes the third in a set of three reports published in March 2017 by the Housing

and Communities Research Group at the University of Birmingham as part of the outcomes of the

West Midlands Social Lettings Agency research project, funded by the West Midlands Housing

Officers Group.* The purpose of this project has been to explore the current and potential future

role of Social Lettings Agencies (SLAs) to address the needs of low income households seeking

decent, secure and affordable rented homes in the Midlands.

The aim of this report is to outline the findings of an evidence review and typology of SLAs used to

inform the research methodology for this project. This literature review helped us to refine the aims

and purpose of the overall research project, and identify gaps in knowledge which could be

addressed by our case study research at Let to Birmingham and evidence gathering in wider case

studies in the West Midlands.

The typology developed in this report also helped construct the underlying questions and topic guide

framework for both the Peer Learning workshops at the three Regional Stakeholder Events and the

case study fieldwork interviews that followed. Early versions of this scoping review and typology

were presented to our Advisory Group in July 2016 and later at the peer learning events in

November 2016 and January 2017.

This report considers whether SLAs can meet the aims of providing a “next-best alternative” (Rugg,

2011) in the absence of a political will to revive social housing. It is set in the context of a shrinking

affordable housing sector and the continued growth of the private rental sector. It explores myriad

definitions of SLAs found in the literature and the divergent (and sometime conflicting) aims of

specific SLAs which suggested our cover illustration of the chameleon. It then draws out some

underlying questions in order to frame a typology of SLAs to use to probe the purposes and

processes of specific SLAs. Gaps in the literature are identified, and a framework outlined which

incorporates key questions to investigate SLAs. The report concludes by reflecting on some

challenges for SLAs, both generally and also specifically in the West Midlands.

*The full list of final reports published in March 2017 for the WMSLA Research Project is:

REPORT 1 – SOCIAL LETTINGS AGENCIES IN THE WEST MIDLANDS: PEER LEARNING EVENTS,

CASE STUDIES, REGIONAL CONTEXT & POLICY RECOMMENDATIONS

REPORT 2 - LET TO BIRMINGHAM 2016 CASE STUDY REPORT

REPORT 3 - WEST MIDLANDS SOCIAL LETTING AGENCIES RESEARCH PROJECT:

LITERATURE REVIEW AND TYPOLOGY (this report)

[PUBLISHED IN 2015 – LET TO BIRMINGHAM 2015 CASE STUDY]

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2. Can Social Letting Agencies (SLAs) help to provide a ‘new social

housing’?

“There is no political will to revive the social housing sector. Local lettings agencies offer a ‘next-

best’ alternative.” (Rugg, 2011, p.5)

In the context of shrinking public affordable housing sector, is it feasible to suggest that the Private

Rental Sector (PRS) accessed through SLAs will become the ‘new social housing’? In order to do so, it

will need to fulfil the core social aims that have been associated with social housing in the form of

security, cost, need and quality.

Social housing has historically meant secure homes and succession rights, and lifetime rather than

fixed term tenancies. But recent years have seen a number of steps to reduce and qualify security of

tenure in social housing but little in the way of an upgrading of security in the PRS from the 12

month assured shorthold tenancies that predominate there.

The affordability of social housing for poor and disadvantaged families has been challenged by social

housing sector adoption of rents at up to 80% of market rents to cross-subsidise state investment,

combined with policy drives to reduce and cap benefits including the notorious bedroom tax.

Housing need is now mediated through welfare conditionality with work and volunteering

requirements set alongside needs banding and a growing intertwining of housing entitlements with

migration policy and citizenship status.

While decent property conditions (one of the earliest driver for council housing) were part of the

social housing aim of capital funding for social housing, access to PRS properties through state

funded welfare payments do not have any direct link between subsidy and quality of

accommodation provided.

Therefore, can housing need be met by SLAs through procurement from the PRS, and if so how can

we ensure a good quality of housing, a reasonable degree of security for tenants to live as a family

with stable education for the children and employment opportunities, and how can this remain

affordable as household circumstances change (e.g. with moves from welfare to employment)? In

these important respects could the PRS become ‘the new social housing’ or not (Mullins 2016)?

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2. 1 Context- The Growth of the Private Sector

Figure 1: Rental Tenure trends over the last century

Tenure shifts in the UK have seen a move from social renting to private renting with the latter taking

over as the larger tenure after 2011. This shift has been driven by a range of policies over many

years, including the move from capital subsidies to personal subsidies, the development of housing

options responses to prevent homelessness and the discharge of homelessness duties by securing

PRS tenancies. At the same time, private Buy-to-Let landlords have until recently enjoyed significant

tax relief on mortgage interest, stimulating a growth in investment for retirement and other savings

purposes, which have further driven the growth of the private rental sector. Significantly, an

additional 1 million low income families with children moved into the PRS in past 10 years.

Meanwhile the PRS has continued to play a role for new migrants and those without recourse to

public funds, some of whom now form a sub-PRS sector with ‘beds in sheds’ and illegal conversions

of non-residential premises which are subdivided and let out.

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3. Social Lettings Agencies – Some Definitions

A number of definitions can be found in literature, ranging from the broad purpose to more market

specific motivations. Shelter Scotland (2015) describes the purpose of social lettings agencies as

helping people access the PRS who are homeless or on low-incomes.

Rugg and Rhodes (2008, p.25) consider the possibility of a wider remit of SLAs:

“Social lettings agencies could be established to deal with all the private renting procurement

required by statutory agencies in a given area. These agencies should charge a standard

management fee, and move the housing benefit market away from a culture of ‘incentive

inflation.”

In a European context, and particularly in markets with a limited social housing stock, such as in

Belgium (De Decker 2002), Ireland (Laylor, 2014) and Hungary (Hegedus et al, 2014) SLAs have been

developed as an alternative tenure for low income households and those unable to access home

ownership.

The importance of such initiatives in preventing and responding to homelessness has been widely

recognise and some advocates have seen a potential of SLAs to transform the very nature of the PRS

in a similar way to the transformation of social housing y privatisation. Thus the European

representative body for homelessness organisations has argued that SLAs could even be viewed as

“part of a movement to ensure adequate and affordable housing for vulnerable tenants through

socializing the private rented sector.” (FEANTSA, 2012, pg.7)

It is important to note the ambition of some of the main advocates of SLAs such as Rugg and

FEANTSA to manage and socialise the market but also to recognise that many SLAs have more

pragmatic and less ambitious aims as the next section discusses.

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4. The Purpose of SLAs – Divergent Rationales

In attempting to uncover the meaning and purpose of SLAs, it becomes evident that there are

divergent and often contradictory rationales. For example, there may be inherent conflicts between

the social and commercial aims evident in some of the UK based good practice guidance on

establishing SLAs

The ‘social’ aspect of social lettings agencies suggests that these organisations do more than simply

providing affordable private rental options. Thus a guide published in 2015 for Crisis argues that for

SLAs to fulfil their purpose; “this cannot be achieved through merely providing them with a roof over

their head,” but rather incorporating a wide range of services such as child care and employability

advice to “assist people to take control, be motivated and move forward”. (Crisis, 2015, p.3)

However, to be feasible, SLAs may need to function like commercial lettings agencies, generating an

income and being competitive in the market. It has therefore been suggested that SLAs are “those

schemes that operate on a commercial basis and so generate income through their activities”

(Shelter Scotland, 2015, p.6) and that they “they operate along the lines of a high street lettings

agency.” (CSJ, 2016, p.64). This thinking has had quite a strong impact in a housing and

homelessness sector that has become attuned to social enterprise models, and has also been

attractive for local authorities looking to help their clients to access decent affordable homes in the

PRS without themselves incurring costs to the General Fund or pressures to increase staffing.

Ultimately, SLAs can be seen as a “broad umbrella term” which, as their name would imply,

incorporates both social and commercial rationales and so “encompasses a large range of different

approaches and types of organisations, with different motivations, structures, operations, funding

and governance arrangements.” (Shelter Scotland, 2015, p.4)

An ambitious range of aims can be uncovered in the literature around SLAs. These include:

• Creating tenant empowerment and giving tenant’s a greater choice

• Providing access to lower than market rents for those who are economically disadvantaged

• Improving local PRS market standards

• Providing a more affordable option to local authorities to alternatives such as Bed and

Breakfast accommodation

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• Adopting a commercial or social enterprise approach to generate income from fees and

rents to cover costs

• Attempting to socialise the private rented sector (FEANTSA, 2012)

• Providing a wider support to assist people to move forward e.g. childcare and employability

support

• Minimising risk to landlords so they are willing to let to benefit claimants. (CSJ, 2016)

• Incorporating social support type services for example SLAs having support workers who

regularly check in on the vulnerable (CSJ, 2016)

While all of these aims are worthy and can be justified in a variety of ways, they may be very

difficult for a single agency with limited staff and financial resources to achieve. Some aims appear

to be attempting to use SLAs to transform the PRS sector, some to manage it and others simply to

work with it. Some of the aims have a cost while others are intended to generate income and

thereby enhance viability. In developing our typology and topic guides for our research we wanted

to tease out how individual SLAs make trade-offs between social and commercial aims, between

landlord and tenant interests and between different roles local authorities have in accessing,

managing and regulating the PRS in their areas. In Section 5 we propose a simple and open way to

do this without unduly imposing assumptions about purposes in the way that several of the guides

we reviewed appear to do.

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5. Typology Elements – Underlying Questions

There are a number of ways to construct a typology of SLAs and these are underpinned by some key

questions around the characteristics of and motivations behind the SLA.

This section of the literature review attempts to unpack the following key questions:

Who? Who are the lead organisations and does

sector and ethos make a difference?

Why? The motivation and rationale behind SLAs is

clearly mixed and variable – how does this

mix affect the model?

How? Many recent commentaries and guides focus

particularly on business models and

operational processes? How does this

impact on the outcome of the SLA?

What? What is the menu or range of services

offered and how does this menu determine

the scope and target client group for SLAs?

Table 1: Underlying Questions

5.1 Lead organisations and sector characteristics

Table 2 illustrates the different types of organisations who can be the lead within the SLAs and

provides some examples of each. For each of these types of organisations, there are particular

organisational and institutional advantages and disadvantages. This means that it is important to

consider SLAs in relation to the sectors in which they reside.

Local Authorities (LAs) and third sector organisations may be seen to start with a key advantage of a

clear social purpose that motivates their involvement in SLAs. They may be trusted to varying

degrees by landlords and by tenants and may have important but varying links to other bodies (such

as the housing benefits department and charitable funders) who can give access to the resources

that a successful SLA needs.

Disadvantages for many LAs and charities may be around acquiring and developing the skills to set

up and run an SLA. This may include staff skills - an issue that was seen as important in the Let to

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Birmingham (LtB) commissioning process - but also appropriate software and technology for a

different market niche, as has been the case in Exeter.

Commercial organisations may already have a business model into which a trading enterprise like an

SLA could fit and may have relevant skills and knowledge in relation to the housing market and

property management and repair issues. However, they may experience gaps in relation to working

with social housing clients, tenancy management issues and dealing with housing benefits. They may

have a greater risk appetite and resources to manage risk compared to public organisations but may

also balance social and commercial purposes in a different way, and may also avoid certain client

groups perceived as higher risk.

Some aspects of sector advantage may be more obscure. For example it was only through case study

research that we identified the substantial advantages that ‘registered providers’ (with the Homes

and Communities Agency), be they non-profit housing associations or for profit RPs like Omega

Lettings) enjoy in being able to use the HALD (Housing Associations Leasing Direct) scheme to access

benefits above Local Housing Allowance rates.

LEAD ORGANISATION

EXAMPLES

Local Authorities Telford Home Finder, Kirklees Housing

Solutions, Exeter, Leeds

Charities Methodist Action, Preston

Housing Associations Framework, Nottingham. HAs

Social Enterprises/CICs

Ethical Lettings Agency, Stockton

Commercial Lettings Agency (commercial lettings agents with a social focus)

Public: Private Partnerships Let to Birmingham, BCC/Mears

Table 2 - Lead Organisations Types

LAs continue to be the main start-up SLAs, because of both greater need and having supply security

motivation in the form of target service users. Charities and advice agencies have similar supply

security and quality motives for their clients, but whilst having good local knowledge may also have a

skills gap around the business of property lettings. The same lack of specialist expertise can also be

pertinent to housing associations (HAs), despite their capacity and strength advantage. For some of

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larger HAs their large scale and centralised services might mean they are lacking in the local

knowledge and market awareness needed for SLAs to succeed.

Community Interest Companies (CICs) would in theory be a good vehicle for social lettings, however

few examples of CIC-led SLAs have emerged in practice. Other potential growth areas and supply

side synergies could be created by SLAs being linked to Empty Homes work within the area of

community-led housing such as Methodist Action in Preston.

Rugg (2011, p.22-24) provides a comprehensive analysis of the particular advantages and

disadvantages according to sector identities.

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Table 3: SLA Advantages and Disadvantages of SLA Organisational Types (Rugg, 2011)

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5.2 Motivation and Rationale

Another underlying question which can be used to conceptualise SLAs is the motivation and

rationale behind them i.e. why have they been set up? Some of the reasons that have been cited

include:

Responding to the Homelessness crisis and resource gaps

Responding to other statutory needs

SLAs provide a more cost effective and better quality housing option than alternatives like

B&Bs

Responding to gaps in the commercial lettings market

Reducing the risks for landlords to increase properties available to Local Housing Allowance

(LHA) claimants

Providing more support than lettings agents

Making better use of private sector stock

Providing more choice and flexibility for clients

Attempting to shape and manage the market

The research typology developed for this project suggests that there is a potential for trade-offs

between the commercial and social purposes of SLAs. SLAs have an increased viability with a larger

pool of properties generating a greater management fee income. Alternatively, there is also the

potential for the cross-subsidy of more affordable social letting by higher costs and fees in different

market niches? Likewise, there is option to offer premium services at an added cost (in a menu

approach) which could be used to subsidise higher risk lettings.

Creating a different service mix for different parts of the market is not without risks though. There

are dangers of ‘creaming off’ lower risk tenants to enhance the viability and reputation of the SLA.

HALD rates that are above LHA rents, may attract more desirable properties but with higher rents

that exclude tenants from moving into low wage work.

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5.3 Business Models

There are different business and funding models that can be adopted for SLAs ranging from more

commercial to not-for-profit set ups. Key to the business model are:

Firstly, initial capital investment to establish the SLA which could be a grant or subsidy

Secondly, ongoing revenues for it to be financially sustainable. Here there could be a mix of

revenue subsidies, fees and trading surpluses. But for SLAs the scope for surpluses relates to

the level of rents that can be supported by Local Housing Allowance (LHA) and the

willingness of landlords to pay fees out of rental income.

Strategic business decisions are needed about whether to compete with local commercial letting

agents, and how the SLA creates a clear service offer or product differentiation from such agents.

A menu of services and scale of charges have to be decided on which are financially viable for the

SLA, suit landlord needs and deliver on social purposes.

As part of the feasibility of the business model, SLAs have to build in limits of Housing Benefit and

the eligible allowances that LAs can reclaim from the Department of Work and Pensions, and assess

whether LHA limits are high enough to support proposed rent and management fees.

The gap between LHA limits and market rents is a recurring theme in these project reports, and in

particular a key concern of participants in the Regional Stakeholder Peer Workshops (Report 1).

This is reiterated by Cambridge City Council in their 2015 review of their SLA, Town Hall Lettings, but

could be a typical comment from a number of local authorities across the West Midlands too:

“High rents in Cambridge relative to the LHA have priced many households dependent on

housing benefit out of the Cambridge market…the LHA tends to fall far short of average

private sector rents in Cambridge across all accommodation types…the trend in rentals in

Cambridge is very strongly upward over the last 22 months. The LHA, by contrast, has risen

only modestly”

(Cambridge City Council, 2015, p. 3)

Different client target groups will have operational implications, for example a focus on local

authority clients will make the referral processes and the IT systems that support the process a

critical component of the business model. If potential tenants are being targeted from a wider niche

beyond the local authority, this has particular implications for service design and marketing.

Different access routes therefore need to be managed appropriately.

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Another key consideration is the level of support that tenants need and the extent to which this can

be sourced and paid for. Severe cut backs in Supporting People programmes have limited the extent

to which external tenant support can be sourced. However, despite the value they place on

managing client risk there are clearly limits to the extent to which landlords are willing to pay for

support services within the management fee. For shared accommodation there may be scope for

eligible landlords to use ‘exempt accommodation rates’ from local housing benefit departments that

can then be recouped from the Department for Work and Pensions. This is however an area of

considerable policy uncertainty at present with a review of housing support and how it is paid for

and proposals to delegate budgets from DWP to local authorities, which may put more pressure on

exempt accommodation rates.

The delivery of services and staffing models also present a range of options from developing

essential in-house skills and using existing staffing resources to sub-contracting services or setting up

partnerships to deliver core and add-on services.

5.4 The Service Offer

The service offer answers the question “what” do SLAs do and is about the choices made around

what menu of services will be provided by the SLA. This choice of services will be informed by the

aims and purpose of the SLA, and include:

• Full management services

• Managing agents

• Tenant finder and rent collection

• Leasing arrangements

• Administration

• Repairs and Maintenance

• Tenancy support, ASB etc. related to housing management

• Wider social support

Each of these services can in theory be separately costed and charged out, but there are questions

about how much landlords will be willing to pay, and if they are not what, if any, additional funding

could be secured to cover the costs.

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There are several possibilities for this problem to the addressed by internal cross subsidy. One

strategy would be to marry the social core services of an SLA with more commercial activities in the

middle or mainstream lettings market. The key assumption here is that operating margins are higher

in the latter and that a similar skillset and brand can be used to deliver both. Another model is to

identify service areas that can attract higher levels of public subsidy (for example through exempt

accommodation rates for shared accommodation, HALD rates for leasing type schemes by registered

providers or external contracts for particular client groups such and refugees and care leavers).

There may be then be potential for a cross-subsidy between the higher social need niches with

higher subsidy and more mainstream lower need niches where there is less external subsidy. We

found little evidence on these different cross subsidy strategies within the literature review but

included this area in our typology with a view to filling this knowledge gap in our case studies.

6. Gaps in knowledge

Continuing the theme of knowledge gaps from the previous section we would argue that most of the

current literature on SLAs takes the form of guides which are predominantly concerned with

process, start up and viability. Less evidence can be found which investigates the outcomes and

experience of tenants and landlords, and this is a critical gap as the success of SLAs depends on

attracting reluctant landlords to SLAs and being able to let the properties to a target client group in a

way that actually meets their needs.

Additionally, in the literature there appears to be limited exploration of the competing social and

commercial aims and trade-offs between them. Finally, apart from brief discussion of LtB and

Worcester CAB SmartLets in Shelter Scotland’s 2015 guide (Evans 2015), there is limited coverage of

SLA examples in the West Midlands in the existing literature.

The aim of this WMSLA research project is therefore to focus on these gaps using the typology

outlined above and illustrated in Figure 2 below:

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Figure 2: A Typology of SLA Models

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7. The 4Ps Research Framework

Drawing on the typology of 4 underlying questions, the ‘4 Ps’ Research Framework focuses on gaps

in the literature and evidence on SLAs, by exploring the people, properties, policy and process that

make up the SLAs we are investigating for this piece of research. These are the simple descriptive

building blocks that we intended to use to investigate our case studies, hold peer discussions and

thereby begin to unpack which of the competing rationales discussed earlier were prevalent within

SLAs in region. Conversely, we hoped to be able to identify the outcomes and limits of existing

models in the region and relate these to the practical design choices made.

Figure 3: The 4Ps Framework

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TABLE 4: THE 4 PS FRAMEWORK – KEY QUESTIONS

1. PEOPLE Who is the scheme intended for (homeless accepted, homeless TA, homeless

prevention, housing options, other LA noms, other)?

How do they rate the scheme- is there any customer feedback?

How do they compare it with social housing or other private rent options?

Does it provide comparable benefits to them compared to social housing?

Why do landlords sign up?

2. PROPERTIES How many properties have case study SLAs secured so far?

Where are the properties?

What are the standards of the properties?

What will the rent/service charge be?

How much does it cost landlords and what benefits do they get?

Do they compare SLAs to commercial lettings agents?

Is there scope to include low demand social housing?

3. PROCESS Why, when and by whom was the SLA set up?

How was the SLA set up?

How is it funded, what is the current business model?

Was an external subsidy needed initially until critical mass built up?

Do landlord fees cover costs and is there scope for cross-subsidy?

How is it organised? Who are the staff and key referral points inside or outside

the council or lead organisation?

What is the scope and challenges of expansion, especially cross-boundary

expansion?

What is the ideal scale and extent of niche specialism for future schemes?

4. POLICY: What are the property procurement and client nomination/referral criteria?

Is there interaction with homelessness applications/CBL, LHA rates (avoiding

poverty traps)?

What are the targets for growth and achievements so far?

Is there interaction with placements by other agencies (e.g. London Boroughs)

•What scope is there to coordinate users of PRS to avoid competition and

‘culture of incentive inflation’?

In marketing to landlords and tenants is there scope to market through CBL?

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8. Challenges and Opportunities

Can SLAs form part of a solution to “fix the broken housing market” in the UK? The think-tank Centre

for Social Justice in their 2016 Home Improvements report, suggest SLAs certainly can:

“We are calling for a capital fund of at least £40 million, and creative use of new funding that

has become available to the Department for Communities, to greatly expand the roll of social

lettings agencies across this country. These provide the incentive needed for more landlords

to rent long-term to Housing Benefit claimants, and provide support for vulnerable tenants to

sustain their tenancies. We also propose a series of reforms to the framework in which the

private rented sector operates, so that families can have security beyond six or 12 months in

their tenancy.”

(CSJ, 2016, p.67)

This reinforces Rugg’s (2014) arguments around effectively accessing the PRS sector, citing evidence

from her evaluation of the Private Rented Sector Access Development Programme, a programme

started in 2010 which aimed to expand the number of SLA access schemes in operation and to

include otherwise excluded client groups. This programme was a collaborative initiative between

DCLG and Crisis, with links to key stakeholders like the Homeless Link, the Ministry of Justice, the

National Landlords Association and the Greater London Authority. In the report Rugg suggests that

three key opportunities and challenges around PRS access for social housing are evident:

“First, the PRS can operate as an effective homelessness measure for people at all stages of

housing difficulty: as a preventive measure, to facilitate move-on and as an option for

complex-needs clients…

Second, the PRS can provide sustainable tenancies that are highly likely to continue beyond

their first six-month period. This is not a short-term option, but can be a long-term solution

and provide a solid basis fora tenant’s re-engagement with the labour market…

Third, using the PRS effectively is not a zero-cost option. Access schemes do require financial

support, and the Programme has demonstrated that the current funding climate presents

challenges for many schemes.” (Rugg, 2014, p. 34)

In the recent DCLG White Paper, while SLAs make a limited appearance, it does appear that SLAs

could gain increasing government traction for many of the reasons outlined in this report:

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“We also want to consider whether social lettings agencies can be an effective tool for

securing more housing for households who would otherwise struggle – providing security for

landlords and support for tenants to help strengthen and sustain tenancies.”

(DCLG, White Paper, February 2017, p. 66)

Collaborative partnerships can provide the opportunity to fulfil these aims, while lowering costs and

mitigating perceived risk. In 2014, Shepway District Council approved a strategy to establishing a

local SLA and recommended working with Ashford Borough Council to extend the existing Ashford

SLA into Shepway. Some of the reasons cited for this decision reinforce both the link between SLAS

and Homeless provision, as well as the appetite for collaboration regionally to pool resources and

share risks:

“a) Developing a Social Lettings Agency would be a cost effective approach to securing

accommodation for homeless and vulnerable households.

b) A Social Lettings Agency would assist the Council in meeting its statutory duties to secure

accommodation for homeless households.

c) The proposed option to extend the Ashford Social Lettings Agency into Shepway is a cost

effective approach to developing this service locally.

d) The recommended option minimises the financial risks to the Council.”

(Shepway District Council, 2014)

However, even with the sound financial modelling and strategic planning, operational issues can

pose further challenges for SLAs. Cambridge City Council approved the setting up of a Social Lettings

Agency, Town Hall Lettings, in 2013, for which Cambridge City Council would be the lead agency. In

2015, they reported on the previous full year of activity, reflecting on why Town Hall Lettings had

been established, how its structure was informed by the local housing context, how it had

performed financially over the previous year and looking ahead to how it was hoping to develop. In

this report, a major problem that was highlighted was that of non-payment of rent, and this was

attributed to a number of causes but significantly to not providing the levels of support needed to

sustain tenancies:

“Clients initially assessed as having low-needs have subsequently revealed challenging

behaviour” and “an early failure to understand the myriad practical demands arising from

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the need to prepare a tenancy from scratch, placing heavy demands on the time of the

managing officer”

(Cambridge City Council, 2015, p. 13)

Learning from this experience, a number of measures have been put in place by Town Hall Lettings

to improve rent collection including tenants being contacted immediately when a rent payment is

missed, trying to receive direct payment from Housing Benefits and looking at automatic rental

payment systems such as direct debits or payments through credit unions.

There have also been other positive initiatives recently, paving the way for possible future financial

and partnership models for SLAs that could be replicated in the Midlands. Since 2013, Croydon

Council in London has invested £45m in the Real Lettings Fund, a joint scheme with the

homelessness charity St Mungo's, who manage the Social Lettings Agency, which has allowed

Croyden Council to cut its annual B&B bill by over £1 million. This has allowed the Council to provide

good-quality, long-term housing for 151 households instead of short-term, emergency

accommodation. (Tanner, 2017).

Despite the success of this investment and lettings scheme in increasing the supply of affordable

accommodation, Croydon still faces the pressure from welfare reform and frozen LHA rates. Like

many of the examples uncovered in this project, the gap between LHA rates and market rents

presents an ongoing financial challenge. In Croydon, typically an average two-bed property costs

£1200 per month to rent, while the LHA is £900, creating a £300 shortfall.

This type of gap also creates financial barriers for potential SLAs and those already in operation in

the West Midlands, as illustrated by the case studies in the accompanying WMSLA project reports.

Other West Midlands specific issues are outlined in Section 9 below.

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9. West Midlands Specific Issues

As this research project explores SLAs in the West Midlands there are contextual factors that should

be taken into consideration.1

There are diverse housing markets across the region and a rural and urban mix. Out of Borough

housing placements do take place from both London Boroughs and also smaller intra-regional

transfers. There is some HA involvement in the intermediate rental market as well and some private

sector RPs who offer specialist supported housing, some of them using exempt accommodation

rates.

Student housing markets have a significant impact, both by creating new opportunities and shaping

the market with more purpose built rental properties, but also through the impact of universities

moving campuses or closing down sites, leaving areas of specific-type rental properties that could be

adapted, converted and made suitable for SLAs. There are also migration and minority ethnic

impacts on both the supply and demand side of housing in the region.

In 2013, five Warwickshire LAs commissioned a study which advised that the ‘social letting model is

unlikely to be the most appropriate model at this time, and particularly not a cross-authority model’

(GLHS, 2013, p.5). The reports cited reasons such as the required set-up costs (of between £70 to

£113 000); the need for an ongoing subsidy (to cover costs above admin and management fees), and

pressures on LHA in the context of growing rent arrears.

This seems to reflect generally some of the feelings around the risks associated with setting up SLAs

in the current policy climate, and reinforces the evidence of a relatively low level of SLA start-ups in

the West Midlands. The regional case study evidence presented in the accompanying two WMSLA

Research Project reports provides further insight into some the barriers preventing more SLAs being

set up in the region, but also demonstrates how SLAs in operation in the Midlands are addressing

these challenges. Ultimately this research aims to consider the potential future role of SLAs to fulfil

the aims of creating a ‘new social housing’ and address the needs of low income households seeking

decent, secure and affordable rented homes in the Midlands.

1 These challenges outlined in general in this Section 8 and this section are explored in further detail in the

Peer Learning Events section of Report 1.

23

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Anna Evans (2015) Social Models of Letting Agencies Scoping study. Shelter Scotland Cambridge City Council (2015) Town Hall Lettings: First Year Review http://democracy.cambridge.gov.uk/mgConvert2PDF.aspx?ID=28410&ISATT=1#search=%22town%20hall%20lettings%22 Clark, A and Monk, S (2013) The role of the private rented sector in preventing homelessness: identifying good practice and the impact of policy change: Final report to the Oak Foundation. Cambridge Centre for Housing and Planning Research file:///C:/Users/halim/Downloads/Oak%20final%20report%2018%20December.pdf DCLG (2017) Fixing our broken housing market, White Paper, February 2017 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/590464/Fixing_our_broken_housing_market_-_print_ready_version.pdf De Decker, P. (2002) On the Genesis of Social Rental Agencies in Belgium, Urban Studies 39(2) pp.297–326. FEANTSA (2012) Social Rental Agencies: An Innovative Housing-Led Response to Homelessness. Good Practice Briefing (Brussels: FEANTSA). GHLS (2013) Feasibility study of a Warwickshire social letting agency Hegedus, J., Horvath, V. and E. Somogyi (2014) The Potential of Social Rental Agencies within Social Housing Provision in Post-Socialist Countries: The Case of Hungary, European Journal of Homelessness 8(2) pp.41-67 Inside Housing Solutions and Crisis UK (2015) Social lettings agencies: How to plan, develop, launch and sustain an income generating SLA. Crisis Laylor, T (2014) Enabling Access to the Private Rented Sector? The Role of Social Rental Agencies in Ireland European Journal of Homelessness 8.2 43-63. Mullins, D (2016) The New Social Housing? Chapter in Gregory and Mullins The Future of Social Housing for Webb Memorial Trust. University of Birmingham. Rugg, J. (2011) Local lettings agencies: a good practice guide. Providing access to the private rented sector while generating income, Crisis, Ethical Enterprise and Employment, (3xE) Network. Rugg, J (2014) Crisis’ Private Rented Sector Access Development Programme: Final Evaluation Report, Centre for Housing Policy, University of York https://www.york.ac.uk/media/chp/PRS%20Access%20Development%20Evaluation_FINAL_email.pdf Rugg, J and Rhodes D (2008) The Private Rented Sector: its contribution and potential. Centre for Housing Policy, University of York. Shepway District Council (2014) Social Lettings Agency Cabinet Report, April 2014

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