On October 18th 2022 Derby City Council’s Regeneration and Housing Scrutiny Board received a paper on “Houses in Multiple Occupation (HMOs)”. Paragraph 4.21 stated:

“In response to the increase in Supported Exempt Accommodation (SEA), which is predominantly located within HMOs, the
Council is establishing a small team, utilising Government homelessness prevention monies, to ensure that these homes have decent conditions and adequate levels of support in line with the level of Housing benefit being received”

Derventio Housing Trust, as a provider of Supported Exempt Accommodation, is a prime candidate for such an investigation.

Previous Derby News articles

Derventio Housing’s housing benefit ‘cash machine’ now funds 3 Directors on nearly £100k salary each.

Derventio Housing’s “cash machine” raises further questions for the Regulator. Will they take legal action?

Since writing the above articles I have been approached by many people who have had first hand experience of Derventio’s operation; they advised of poor/infrequent support and raised many concerns over the use of public money.

I asked a senior person in Derby City Council why they didn’t consider investigating Derventio Housing. They didn’t provide a robust response in defence of Derventio but a casual “well…, they solve a problem for us”.

[Note: Whilst the Housing Benefits (HB) paid to Derventio are received directly from Derby City Council, they are fully reclaimed from central Government – there is no impact on Council Tax. This is a feature of this type of tenant/ accommodation – most other HBs are paid via Universal Credit]

Background

The business model used by Derventio is also used by My Space Solutions which was featured in the Panorama programme “The making of a housing benefit millionaire”. My Space Solutions was also referred to in a previous Derby News article:

Mackworth residents threatened with eviction as they are not vulnerable enough.

My Space Solutions is about 3 times the size of Derventio in terms of turnover, number of properties and staff numbers. Other comparisons provide some interesting insights:

In the last 4 years, Derventio has required its staff to progressively support more people; this is now at a level greater than that of My Space Solutions.

This is also reflected in the overall reduction in support staff numbers despite the increasing number of tenants.

Note that whilst support staff are reducing, the number of management / admin are increasing including the number of people being paid more than £60kpa. The remuneration package of the highest paid director in Derventio, Sarah Hernandez, is £140,000; the last CEO in My Space Solutions was paid £69,750.

Apart from the staff costs the other large expense is house maintenance. The average maintenance cost per property in Derventio has increased since 2018 when all maintenance was provided by Homes2Opportunities Ltd – the separate company which is wholly owned by Sarah Hernandez. She was also the sole director until 1 April 2021 ( following the publication of the Derby News article) – she resigned her position which was taken over by close friend Matthew Fletcher.

Another supported housing provider Golden Lane Housing ( subsidiary of Mencap) which operates a similar model and is of a similar size to My Space Solutions operates at a maintenance cost of ~ £1400 per property.

Both My Space Solutions and Derventio claim Housing benefits of around £250 / week per tenant from the local authority.

• Derventio Housing Trust ( on average) pays its landlord 25% of £250/week ~ £65/week
• My Space Solutions ( on average) pays their landlords ~50% of £250 / week ~ £125/week. (Golden Lane Housing also pay ~ 50% of the rental income to the landlord)

Despite all of the above expenditure Derventio manages to deliver a healthy growth in profit. Derventio is a Community Interest Community and limited by guarantee so does not have a profit motive to pay dividends to shareholders. Any surpluses should be for the benefit for their stakeholders – vulnerable/homeless people.

Comment

In a report published in the Local Government Chronicle (27th October 2022) titled “Exempt accommodation a ‘complete mess’, MPs find” there were a number of very challenging conclusions:

This gold-rush is all paid for by taxpayers through housing benefit. This must change and it is crucial the government brings forward reform on a range of areas including on standards, regulation and oversight, and on funding to put this right.

A Department for Levelling Up, Housing & Communities spokesperson said: “It is unacceptable that unscrupulous landlords are trying to profit at the expense of vulnerable people and we are bringing forward a package of measures to stop them in their tracks.

http://www.lgcplus.com 27/10/22

It is also interesting to note that in the most recent My Space Solutions Accounts (31/10/2020), it reports that a sum of just over £8.6m of Housing Benefits was being queried by a number of Local Authorities

It is clear that difficult questions need to be asked by the authorities over:

• the justification for the level of Housing Benefits claimed by Derventio from public tax payer funds. Especially as the reduction in the number of front-line staff implies a deterioration in the level of support provided.
• the salaries of the highest paid staff, and
• how much profit is being made by Homes2Opportunities off the back of Housing Benefits and how much of that is for the benefit of the Managing Director, Sarah Hernandez. The cost of maintenance is at least twice the industry norm.

Derventio has already been reported to the Office of the Regulator of Community Interest Companies.

Derventio is part of the solution to the City’s Homelessness problem, however this shouldn’t be a reason for a few individuals to benefit, handsomely, from that status. There should be more transparency with an organisation that is almost entirely funded by tax-payer money.

The Governmental impetus to investigate and challenge these operators is long overdue. The question is, what powers of investigation will they have. Perhaps it needs a body that can be a little more forensic…?