EXEMPT by sdaferv

VIEWS: 38 PAGES: 5

More Info
									                                                                HSM/05/2005

                       KENNET DISTRICT COUNCIL

 COMMUNITY DEVELOPMENT EXECUTIVE COMMITTEE –18 JANUARY
                         2005

         PREVENTION OF HOMELESSNESS – NEW INITIATIVES

               A Report by the Housing Services Manager



1.0 PURPOSE OF REPORT

1.1 To propose the introduction of Let Plan Landlords Insurance through the
    Rent Deposit Guarantee Scheme and other improved benefits in order to
    cover some of the risks associated with letting property and to
    encourage the release of more accommodation through the private
    rented sector for homeless applicants. To offer professional mediation
    services.


2.0 FINANCIAL AND STAFFING IMPLICATIONS

2.1 If successful the Let Plan Scheme would help to increase the number of
    landlords and subsequently properties let through the Rent Deposit
    Guarantee Scheme for homeless households. This will increase the
    workload on staff within Housing Services. The impact of this will be
    monitored through the quarterly performance reports.

2.2 An increase in the number of Rent Deposit Guarantee lettings would
    help to further reduce the reliance on bed and breakfast and the use of
    temporary accommodation which would result in savings in the cost of
    providing bed and breakfast. The average weekly cost of bed and
    breakfast is between £175 (single) and £350 (family).

2.3 If approved the Let Plan Scheme would be run for a one year pilot in
    order to monitor interest. The cost over the next financial year is
    estimated as a maximum of £4,800. This cost will be met from a budget
    of £44,000 allocated by government to the Council for measures aimed
    at preventing homelessness.

2.4 It is also proposed to enhance the benefits offered to landlords accepting
    the nomination of a homeless household where the Council has a
    rehousing duty. It is estimated that this may result in an additional cost
    of around £1,000 per annum on the Rent Deposit Scheme budget. This
    will be met from the Homelessness specific grant.
2.4 The Council also proposes to meet the cost of a professional mediation
    service where this may serve to avoid homelessness. Each case will
    cost a minimum of £500. A budget of £3,000 will be set aside from the
    Homelessness specific grant.

2.5 It is proposed that staff within Housing Services will oversee the running
    of the scheme which will be operated direct by Let Plan which is part of
    Hanover Park Services Plc. An insurance helpline is available through
    Let Plan to deal with any questions and issues arising.


3.0 INTRODUCTION

3.1 The Rent Deposit Guarantee Scheme helps customers on the Kennet
    Housing Register gain access to the private rented sector by issuing the
    landlord with a written guarantee in place of a cash deposit. The
    guarantee, which is the equivalent to one month’s rent, can be used
    against damage to the property or rent arrears at the end of the tenancy.

3.2 Tenants are often required to pay the landlord a deposit, rent in advance
    and fees to cover administration costs. Many people find it difficult to
    raise this amount of money all in one go. The scheme makes it more
    affordable to those on a lower income, by issuing the landlord with a
    written guarantee instead of a cash deposit from the tenant.

3.3 Landlords often voice their concerns through the Private Landlords and
    Letting Agents Forum about letting to tenants on housing benefit. Issues
    such as delays over the payment of housing benefit and damage to the
    property are common concerns.

3.4 There are currently around 60 properties let through the Rent Deposit
    Guarantee Scheme and it is anticipated that providing landlords with rent
    guarantee cover will encourage additional properties onto the scheme.

3.5 The table bellow shows the number of Rent Deposit Guarantee’s issued
    over the last 3 years.

 Best Value Performance Indicator
 H020                 2001/02             2002/03            2003/04
 Private Sector lets  13                  16                 21
 to those in need
4.0 BACKGROUND

4.1 Let plan

4.2 It is an objective of the Kennet Corporate Strategy to reduce and if
    possible eliminate the use of bed and breakfast and to maximise the use
    of accommodation within the private rented sector.

4.3 The Council is proposing to link up with Let Plan in order to launch a new
    initiative for private landlords who are willing to let their properties to
    homeless applicants.

4.4 The Private Property Plan is a proposal designed for private and
    professional landlords to cover some of the risks associated with letting
    property and to encourage the release of more rental housing to
    households in need.

4.5 If approved Kennet would be able to offer the ‘Let Plan’ scheme free to
    landlords letting their properties through the Rent Deposit Guarantee
    Scheme for the first year which would protect rental income.

4.6 Under the scheme landlords would be offered free rent guarantee and
    legal expenses in the event that a tenant failed to pay the rent. Let Plan
    would therefore pay the rent the landlord would be expecting for the
    property for up to 12 months excluding the first months lost rent.
    Additionally, the insurance company will pay 50% of the rent for up to
    three months after vacant possession has been obtained, whilst a new
    tenant is found. Full legal expenses are also included.

4.7 The Let Plan insurance is designed for properties let on an Assured
    Shorthold Tenancy and assuming there is no adverse credit or tenancy
    history applicants will be accepted who are in receipt of housing benefit
    or other state benefits. The tenant acceptance criteria must be met
    which includes details of the applicant including name, date of birth,
    current address, current or previous landlords reference and an
    investigation into their financial circumstances where possible.

4.8 A number of private landlords were canvassed during the Landlords and
    Letting Agents Forum about the possible introduction of the Let Plan
    Scheme. The response was extremely favourable particularly given the
    benefits and the fact that the scheme is free for the first year.

4.9 Other benefit enhancements

4.10 In addition for statutory homeless cases, it is proposed to enhance the
     Rent Deposit Guarantee Scheme to meet administration fees up to £100
     and by allowing the Deposit Guarantee to increase to 1.5 times the rent.
     The standard agreement covers one months rent only.
4.11 Mediation

4.12 The use of mediation offers a further well established opportunity to help
     prevent homelessness. Through mediation, disputes, which could lead to
     homelessness, can be addressed in a safe, confidential, conflict-free,
     and non-judgemental manner. For example, the resolution of a problem,
     through mediation, that allows a teenage child to remain living in the
     family home, rather than being asked to leave, can prevent
     homelessness.

4.13 Mediation (Salisbury and District) is a locally based organisation that
     provides just such a service using impartial, professional mediators. The
     organisation is nationally accredited through Mediation U.K., and
     operates to recognised quality standards, using trained staff. The
     Council, therefore, proposes to use this organisation for the provision of
     a mediation service, in appropriate cases.


5.0 THE LET PLAN SCHEME

5.1 The cost of running the scheme will comprise an annual premium based
    on 3% of the annual rental income for the Rent Guarantee and Legal
    Expenses cover. Based on an average rental of £550 per property the
    annual cost to the Council would equate to £160 per property per
    annum. This takes into account a 20% reduction in the premium for
    local authorities. It is anticipated that up to 25 properties would be taken
    on under the scheme during the pilot year which would equate to £4,000.

5.2 In addition, an up-front payment in the sum of £800 is required from
    Kennet for the artwork creation and a contribution towards the printing
    costs of leaflets. This payment is refunded once the Council have
    produced and paid for 50 policies.

5.3 There is no legal requirement for Kennet to have this type of Let Plan
    insurance cover. As an alternative, Kennet could self insure these risks.
    Under this option, significant funds would need to be set aside in order to
    meet any potential liabilities, representing a considerable financial risk.
    In addition, Kennet would not have the specialist legal or insurance
    expertise to deal with the resulting claims.

5.4 A copy of the Let Plan Service Guidelines has been forwarded to
    Democratic and Legal Services for their consideration.

5.5 In the past, the Council’s insurance policies have always been arranged
    by Marsh UK Ltd. Insurance cover has been procured, following a
    prescribed tender process, due to the high values of insurance involved.
    As the cost of the Let Plan Scheme insurance is much lower and the
    housing field is fairly specialised, Marsh UK Ltd are happy for the
     Council to go ahead and implement the Let Plan Scheme without them
     being involved.

5.6 In addition, Marsh UK Ltd carried out some research and reported that
    the Let Plan Scheme appeared to represent good value for money.

5.7 Marsh UK Ltd have also have advised that the Let Plan Scheme is
    backed by reputable insurers. They have recommended that Kennet
    officers seek references from other Council’s involved with the scheme
    to ensure that the company offers a good service when it comes to
    defending or settling claims.

5.8 A number of local authorities are operating the Let Plan Scheme and
    references are being sought from Bristol City Council and Westminster
    City Council.


6.0 CONCLUSIONS

6.1 The Let Plan initiative will provide an additional incentive for private
    landlords to let their properties through the Rent Deposit Guarantee
    Scheme to households in need.


7.0 RECOMMENDATIONS

7.1 The Committee approves:
    i) The introduction of the Let Plan Scheme to be run in conjunction with
    the Rent Deposit Guarantee Scheme and to establishing a reserve fund
    of £5,600 from the ODPM homelessness grant to fund a one year pilot.
    ii) The improved benefits for the Rent Deposit Guarantee scheme as set
    out in paragraph 4.9.
    iii) The introduction of a Mediation scheme aimed at preventing
    homelessness.


8.0 BACKGROUND PAPERS

8.1 Homelet Referencing Service Guidelines.

								
To top