1. The Charity Commission for England and Wales has published a blog post dated 20 November 2023 that discusses the risks associated with the provision of supported housing via the lease-based model. It also acknowledges the benefits in appropriate circumstances.1‘The Lease-Based Model of Supported Housing – Charity Commission View – Charity Commission’ (20 November 2023) accessed 29 November 2023
2. The post explains that the lease-based model is where a charity does not own the properties through which it provides accommodation but instead holds lease agreements with an individual or entity such as an investor or property developer.
Supported Housing and the Lease-based Model
3. The Charity Commission defines supported housing as “accommodation provided alongside support, supervision, or care to help people live as independently as possible in the community”.
4. It explains the lease-based model, whereby charities provide accommodation through leased properties instead of owning them. This may even include leasing back properties they originally owned and were sold to third parties.
Key Risks of the Lease-based Model
5. The Commission identifies the following risks of the lease-based model in supported housing:
6. Trustees and charity leaders face challenges in understanding and meeting complex lease obligations and managing these risks.
“The Commission has seen cases where trustees may not have fully understood the implications of the lease terms and consequently have taken on obligations that are difficult or impossible to meet, for example repairs and upkeep of the property obligations or increases in lease payments.”
7. There is a serious risk of long-term leases becoming unaffordable due to financial constraints or changes.
“The Commission has seen cases where charities have entered into high-cost leases over a long period, sometimes up to 25 years. During this time, the charity has run into financial difficulty and been unable to meet the terms of the lease.”
Housing Benefit Changes
8. Much of the income to meet the lease obligations comes from the Housing Benefit scheme. This scheme is complex and can change.
“As a trustee, you should consider whether your charity could meet the costs of a lease if the income from Housing Benefit dropped significantly because of a change in the rules or a failure to qualify.”
Conflicts of Interest
9. The Commission is urging trustees and charity leaders to manage conflicts, especially where trustees may receive personal benefits.
“In instances where the Commission has evidence of trustees receiving unauthorised benefits from a charity it takes action. This can include requiring trustees to return the value of a benefit to the charity.”
Rapid Operational Growth
10. The Commission also cautions trustees and charity leaders to be wary of difficulties in adapting to rapid operational growth after adopting the lease-based model.
“As trustees you need to ensure you have sufficient standards and procedures in place to meet the needs of your beneficiaries and your legal obligations as the charity’s provision of accommodation grows.”
11. The Charity Commission emphasises its role in alerting the sector to emerging risks and providing guidance.
12. It expects trustees and charity leaders of supported accommodation providers to consider the following guidance and ensure that they discharge their duties prior to the adoption of the lease-based model.
|Trustee Guidance on Decision Making
|Trustees must always follow this guidance, making sure all decision-making and risk assessment is also properly recorded.
|Trustee Guidance on Conflicts of Interest
|Trustees must ensure that any conflicts of interest are properly managed in line with this guidance.
|Trustee Guidance on Trustee Payments
|Trustee payments must only be made when appropriate and in line with this guidance.
|Links to Non-Charities
|Trustees should be mindful of the risks associated with working with non-charities and must manage these risks in line with this guidance.
|Trustees should regularly review and assess the risks faced by their charity in all areas of its work and plan for the management of those risks.
Risks and Benefits of the Lease-based Model
13. The Charity Commission concludes its blog post in these terms:
Although the Commission urges charities to be mindful of these risks, we accept that, in certain circumstances, the lease-based model of providing supported housing can allow charities to provide services to a greater number of beneficiaries.
14. Trustees are advised to assess risks, seek advice, and ensure proper discharge of duties for the charity’s success.
© Martin Ward and Philip Parnham | November 2023
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