Agenda item

Pre-decision Scrutiny of the Scheme, which is a component of the above (Monmouthshire Lettings Service).

Context:

The purpose of this report is to propose to establish a budget account to enable the Council to offer rent guarantees and ‘paper’ deposit bonds to further strengthen the homeless prevention toolkit through improving access to private rented accommodation.

Recommendations:

1. To consider how the Homeless Prevention Reserve Fund will support the Council’s statutory duty to prevent homelessness and provide the foundations for a future income generation opportunity and make recommendations as appropriate.

2. To recommend to Cabinet to agree to establish a Homeless Prevention Reserve Fund.

Key Issues:

1. Under the Housing (Wales) Act 2014, the Council has a legal duty to both respond to homelessness and to prevent homelessness. The Act also provided local authorities with the power to discharge the associated duties through the private rented sector. The Committee will be aware that it has been a priority for the Council to expand and strengthen homeless prevention activity. The Committee will also be aware that in seeking to improve homeless prevention, focus has been given to enabling access to the private rented sector as an alternative to over reliance on social housing and the need to utilise bed & breakfast.

2. Although the Council is increasingly accessing the private rented sector to prevent homelessness, this continues to be a challenge for a range of reasons. This includes:

·         Homeless applicants are often low income households and in receipt of benefit.

·         Lettings agencies and landlords are often reluctant to accept households on benefit.

·         Many households cannot afford to meet upfront payments and costs associated with securing private sector accommodation. These are routinely agency fees, bonds/deposits and rent in advance.

·         Vulnerable and low income households are often perceived as a risk to landlords with regards to potential damage and non-payment of rent.

·         Some households with complex needs are difficult to accommodate in any sector

·         Some landlords refuse to work with certain external preventative agencies

3. In this context, there is often a reluctance of landlords to support the Council with rehousing applicants. There is a need, therefore, for the Council to try and strengthen the support provided to private landlords to help overcome fears and perceived risks

4. Established practice already exists through the Housing Options Team to provide support to tenants that benefits landlords through an existing Prevention budget. This regularly includes making payments for letting agency fees, bonds/deposits and rent in advance. It is considered though there is scope to further both strengthen this level of support and improve procedures to minimise the financial risk and cost to the Council.

5. It is, therefore, considered appropriate and prudent to establish a ring-fenced Homeless Prevention Budget Reserve to operate alongside the Housing Options Team’s Prevention Fund. The intention is that when appropriate, the Council will seek to make under-written financial commitments/promises to landlords as an alternative to making a cash payment. For example, a landlord may require a bond of £500. This would be transferred into the Reserve rather than being paid directly to the landlord. Should the landlord need to claim on the bond, this can still be easily paid out. However, in the event of the landlord not needing to claim, the sum would still be available to be used for a similar purpose to prevent homelessness for another applicant. It’s also proposed, subject to availability, 5% of the

Prevention Budget is paid into the Reserve to help build up resilience and flexibility.

6. Homeless prevention activity would continue to be implemented as per current procedures and relevant payments from the Prevention Fund (for example to underwrite a bond) would be made into the reserve. There would be no net cost to the Council.

7. The Reserve is a more sustainable approach to budgeting. Advantages include:

·         Being able to issue ‘Promises’ to landlords as an alternative to making cash payments.

·         The ability to carry funding forward into subsequent financial years increasing flexibility.

·         The Reserve would help to smooth annual volatility through enhanced resilience.

·         The Reserve would facilitate the increase of practical support to landlords.

·         The Reserve supports the Future Monmouthshire policy and the development of the Monmouthshire Letting Service, the aim of which is to become a fee charging service.

·         The Reserve helps mitigate against B & B use and expenditure.

Member Scrutiny:

It was clarified that they wish for an account to be set up with no additional expense.

A member asked where funds would come from and we were told that 5% of the exiting budget would be paid into the account as a reserve, subject to this money being available.

It was asked if Melin homes had anything to do with this scheme and we were answered no.