Manchester city council is forking out millions of pounds every year to private housing providers for leasehold temporary accommodation (TA).
The main beneficiary was Accommodation Links (AL), a Stockport-based housing provider, which received £2,660,099 for providing TA in 2016-17, the Meteor can reveal. In the 2021-22 financial year, it received £4,595,400 — a 72% increase.
Families living in this insecure accommodation are also having to stay in it for longer as the council struggles to find suitable properties to move these households into, during an ongoing housing crisis — a crisis in which the shortage of social housing, and its continued loss, is commonly acknowledged as being a major factor behind the difficulty in finding permanent homes for households (single people or families) presenting as homeless. This is resulting in the large numbers living in TA, and being added to a housing waiting list. In Manchester this totalled 12,893 households in 2021.
A Meteor report in May, based on a Freedom of Information (FOI) request to Manchester city council, revealed that homeless households in Manchester experienced a 42% increase in the average time they spent living in TA in just two years — from 358 days in 2016-17, rising to 508 days in 2018-19.
We asked for details on households in TA that the council had an obligatory duty to provide housing for. This occurs after an assessment of a household’s status and the council accepts a duty to house them under the obligations of the Homelessness Reduction Act 2017.
We also asked the council how much it was spending each year on TA. In 2016-17 the council spent £11.48m, increasing to £29.16m in 2020/21 — a 154% increase. This soaring cost corresponds with the rising number of households living in TA, which has skyrocketed since 2015.
Who benefits from this spending increase?
The Meteor asked Manchester city council what companies it had contracts with to provide TA. The council responded in February with a list of 18 private companies with whom it has signed Private Sector Leasing (PSL) contracts. We also asked how much the contracts were worth and what the companies had been paid by the council. The council did not provide that figure and pointed us to the “Expenditure Exceeding £500” data it had published, to determine payments to these companies.
Based on this data we calculated that five companies received over one million pounds in the 2021-22 financial year to provide PSL homes to the council. These figures could be an under-estimate as there may have been multiple payments of under £500 that do not appear in this data.
|Company providing PSL housing||Payments in 2021-22|
|Accommodation Links Ltd||£4,595,400|
|Mack Residential Letting Ltd||£1,930,234|
|District Homes CIC||£1,756,698|
|T15 Consultancy Ltd||£1,695,280|
|B & A Properties||£1,408,330|
This model of TA provision is expanding rapidly in the city. In 2021 PSL housing made up approximately 3/4 of the total TA in Manchester — compared to 2019 when it contributed about 2/3.
This change has been mainly achieved by a reduction in TA provided by private landlords or the council and other social housing providers. In the council’s PSL service specification it states that it is promoting PSL as a model, to reduce the number of B&Bs used by homeless households with children. But B&B usage actually increased alongside PSL in Manchester between 2019 and 2021.
The PSL model has three major components. Housing providers, such as Accommodation Links Ltd, will generally lease the properties on their books from a private landlord. The provider then promises to provide a certain number of houses to the council, via sub-leases, at a fixed weekly rent payment (plus management fee) from the council to the provider. The council then houses homeless households in these properties, using temporary accommodation licence agreements (there is no tenancy agreement), and it is the council that collects any housing benefits from the households living in these properties.
The council revealed that under the initial framework agreement put in place in 2014 to manage PSL the council had a budget of £600,000 per year for all companies providing this housing. The provision of housing by Accommodation Links alone has blasted through that budget. In 2016-17 the company received £2,660,099 for providing PSL housing, in 2021-22 that payment had increased to £4,595,400 — a 72% increase.
Responding to our FOI, the council said that at the start of the 2021-22 financial year Accommodation Links was providing 464 PSL properties. At the end of the financial year it was providing 455. So an estimate, using the average figure of 460 houses, for the price paid by the council for each property is £192 per week.
Compare that to the average of £79 per week rent on a two bedroom property charged by social housing provider Northwards Housing in north Manchester, which since being brought back in house by the council can be considered bona-fide council housing. The council revealed this to us in responding to our FOI.
Good value for public money?
These findings raise new questions about the efficiency of the privatised model of TA provision in Manchester. Debbie Blanchard, speaking on behalf of Greater Manchester Housing Action, said:
“£192 per week, if anything, seems like an underestimate. In my experience, £250 per room per week is par for the course and one four-bed house can cost up to £30,000 per year in rent.
“Youth hostels are better value than investor-provided temporary accommodation. They include all the 24/7 staff and tenancy training kids need for that £192 — or less. Temporary accommodation has none of that.
“The temporary accommodation spend by Manchester council last year was £29 million. The temporary accommodation bill next year is likely to be over £38 million. There are fat cats at the centre of this gravy train with council commissioning mates who are doing very well out of it — and don’t want it to stop.”
The Meteor asked the council whether the PSL model was an efficient use of public money and whether it planned on expanding it. Deputy leader Joanna Midgley said:
“The number of people in temporary accommodation in Manchester is too high. It is unsustainable and we know that for those experiencing it, especially families, it is very far from ideal. We are working hard to reduce those numbers as a matter of priority — both through helping to prevent people becoming homeless in the first place and by increasing the supply of permanent accommodation available.
“We have commissioned work to help us redesign homelessness prevention pathways, improve the support offer for temporary accommodation residents and secure longer-term alternatives to temporary accommodation.
“Considerable progress has been made in recent years in reducing rough sleeping but we need to see that success mirrored in bringing down the number of people living in temporary accommodation. We are under no illusions that this is likely to be very challenging against a backdrop of continuing high numbers of homelessness presentations and the difficult economic challenges that people are currently facing.”
We do not have a breakdown of the size of the properties provided by Accommodation Links, but it is likely that the majority are two bedroom properties that will be able to accommodate families with one or two children.
Addresses of properties the company owns and manages is available on the Companies House website in documents concerning the leasehold and freehold agreements the company has signed.
Many of these properties are situated in north Manchester with M9 (Harpurhey and Blackley) and M18 (Gorton and Abbey Hey) being popular postcodes. Viewing some of the properties on Google maps shows that many are two up and two down terraces, and some appear to be ex-council houses that have made their way into the private property market via Right to Buy — a scheme the government has announced they plan to expand which is predicted to further diminish the social housing stock.
In responding to our FOI, the council said that the management fee originally agreed with Accommodation Links for each property was £20 per week per property, but that it could vary between properties. So for Accommodation Links, just one of the 18 companies providing PSL homes in Manchester, an estimate of the annual management fee they earn based on 455 properties is £473,200.
The service specification document, produced by Manchester council to define what is required of PSL homes and its providers, includes a clause that allows it to retain £30 per week per property of any management fee if the property does not meet the “standards of the Housing Act 2004”. The specification also allows the council to carry out random standards checks on the homes, but we have no information on how often these are carried out.
Who is Accommodation Links?
Accommodation Links’ latest company accounts seem to show it is doing well financially. Cash reserves more than tripled from £0.54m in 2020 to £1.80m in 2021. The company’s property assets have nearly doubled over the same time, rising from £1.81m to £3.46m; with a bank loan of £2.62m underpinning these assets.
Registering a profit of £328,209 in 2021, Accommodation Links is a company with a registered office in Stockport. The person listed as having significant control over the company, owning 100% of the shares, is Syed Munazzam Hashmi, a British national who currently resides in Pakistan.
The accounts filed by Accommodation Links are a form of abbreviated accounts as they do not contain a full profit and loss account. Although this is perfectly legal in the UK for small companies, the economist Richard Murphy is an ardent critic of these types of account, describing them as “abbreviated abominations” and has said of them:
“Most companies in the UK are defined as small, and the vast majority of these take advantage of exemptions made available to them in law to file what are described as ‘abbreviated accounts’. These are not accounts at all because they do not include sufficient information to be described as such.”
Many households being accepted as homeless by Manchester council and offered PSL accommodation will be receiving housing benefits, but some will be working, mainly in low paid jobs, and may be subject to paying these close-to-market rent rates, which can be extremely difficult to manage, particularly in the current cost-of living crisis.
Those claiming housing benefits are limited to a maximum amount defined by the Local Housing Allowance (LHA) rate, which differs between regions. The LHA rate for Central Greater Manchester, which covers all of north Manchester, is £149.59 a week for a two-bedroom property. As the council collects the housing benefit from these TA licensees living in PSL houses, any weekly rental price paid over that LHA rate would need to be met by the council.
The council informed us that the rents set for these properties were decided between the PSL provider and the landlord owning the property, saying “the rent is effectively market rent set by the landlord for each individual property.”
Is there a solution?
As we reported in a previous article in this series, Shelter, the Local Government Association, Chartered Institute of Housing and the Centre for Homelessness all believe that increasing the amount of social housing available is key to reducing the need for temporary accommodation and effectively addressing the housing crisis.
The fact that the initial budget of £600,000 per annum for all PSL temporary accommodation housing providers has been comprehensively smashed by just one of these providers suggests that the expansion of this scheme by the council is due to it primarily reacting to the issues around the housing crisis as they arise — rather than forward planning trying to address it.
Manchester council may be limited in how it can plan to counter the housing crisis due to national government policy, but there are green shoots of hope appearing with the council announcing plans to build a small number of social rent homes for the first time since the 1980’s.
When we asked what Manchester council would do to address the shortage of social housing in the city, its deputy leader Joanna Midgley reaffirmed this commitment, saying: “We will continue to work with a wide range of partners to source suitable accommodation and are committed to building more social housing in Manchester and increasing the number of accessible and affordable homes.”
Imagine what could be achieved if the public money currently profitting these private housing companies was instead invested in social housing.
Accommodation Links has been approached for a comment.
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This article is part of the Housing Insecurity series – click here
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Featured image: Google Maps.
It’s easy to say “invest in social housing”, but how will that get done given our sclerotic planning system? What will be put in place to stop nearby homeowners and landlords objecting to what they will likely dismiss as “slums of the future”? Or those who oppose any and all construction on environmental grounds? You only need a handful of determined NIMBYs to delay much-needed homes for years on end, or block them outright. Unless we move to a rules-based system, well-housed locals will make life more difficult for those who desperately need homes.