Homeless people owe £34m debt to councils for 'highly questionable' charges 5

Homeless people owe £34m debt to councils for ‘highly questionable’ charges

Homeless people across Scotland owe councils over £34million in “highly questionable“ charges for temporary accommodation, according to research by a Glasgow-based public law firm, which alleges local authorities may be acting unlawfully.

Campaigners said the “extortionate” charges were leading to debts worth thousands of pounds, and putting strain on people’s mental health when they were at their most vulnerable. 

The report on charges incurred for temporary housing, due to be published next week, is based on freedom of information requests made by the Legal Service Agency to every local authority in Scotland.

Lawyers asked for details of unpaid charges as of December 2020. These can be incurred for rent for temporary homeless accommodation when it is not covered by housing benefit, either because people are not eligible or because the rent charged is more than the benefit will cover. 

In addition some councils and housing associations will charge for services offered through supported accommodation, food in catered hostels or for “management fees”.

In total, charges worth £34,478,480 were recorded as of December 2020 by 29 local authorities. Three did not provide the data. 

Temporary housing – which includes furnished flats, hostels and homeless B&Bs – is offered on a no-choice basis when people find themselves “unintentionally” homeless. 

By law any charges made for temporary homeless accommodation should be ‘reasonable‘. But LSA argues charges are often excessive and accused councils of potentially acting unlawfully.  Shelter Scotland claims charging a homeless person full rent for temporary accommodation is legally challengeable.

Campaigners and housing charities said high charges – including rent of up to £550 a week for poor quality accommodation – meant some were unable to access temporary accommodation, leaving them without a safety net. 

They also pointed to the long delays in the housing system leaving people trapped in debt for months or even years. Last year people spent an average of 199 days in homeless accommodation. As of March 2021, 13, 097 people in Scotland were housed in temporary accommodation, a rise of 12 percent on the previous year.

But councils contacted by The Ferret insisted they acted according to Scottish Government guidance and took individual circumstances into account. 

Many of the highest levels of debt were recorded by Scotland’s largest local authority areas. These included City of Edinburgh Council, which reported arrears of £12,711,641 from 1 January to 6 December 2020.

In total 4,855 households stayed in temporary accommodation for at least one night in the local authority in that period, and data provided by the council suggests that a total of 2,248 were liable to make a direct payment.

In Glasgow a total of £5,163,685 in arrears was owed as of 31 December 2020, with 5,735 people charged for temporary accommodation last year.

In North Lanarkshire the total outstanding debt owed by homeless people for temporary accommodation charges was £4,801,817 as of 18 December 2020. Homeless people built up debt worth £4,417,123 in Highland Council, which provided figures for the 2019/2020 financial year. 

Both Fife and Aberdeenshire councils recorded total debts for temporary accommodation charges of over £1million. 

LSA asked for the information from all councils after noticing several of its clients had been asked to pay charges for temporary accommodation it viewed as unaffordable. The legal practice also re-examined case files while compiling the briefing report.

Ben Christman, solicitor at LSA, said temporary accommodation – which is usually offered to homeless people on a no-choice basis – was often both “exorbitant” and “substandard”. In one case, he said, a client was asked to pay £500 a week for a Glasgow homeless hostel.

He said the “shocking” sum of debt owed by homeless people across Scotland showed it was time for the nationwide issue to be addressed. 

“Clients are often angry, stressed and upset by the charges,” he told The Ferret. “Some of our clients have got into several thousand pounds of debt as a result of these charges. Debt is well understood to be a catalyst for mental health problems.

“We found that clients were facing similar issues in different parts of Scotland,” he added. “It didn't seem to be a case of one local authority 'gone rogue'.”

“The legality of the approach of many local authorities to charging for temporary accommodation is highly questionable. Legal issues to one side, being homeless is difficult enough – the last thing that people in that situation need is to also be put into significant debt when they try to get help. These unaffordable charges must urgently become a thing of the past.”

In the short term, all local authorities should review their policies and ensure that any charges are affordable for individuals, he claimed. Longer term, LSA is calling for Scottish law to be changed so that local authorities can no longer charge for temporary accommodation.

I would question the practice of charging anyone placed in temporary accommodation. We should be supporting people into sustainable tenancies in good quality housing, not taking advantage of them when they need help.

Pauline McNeill, housing spokesperson for Scottish Labour

For previous reports The Ferret heard from many people that poor accommodation standards and a lack of security affected their physical and mental health, particularly those placed in  B&Bs, operating as hostels.

Exemptions to new legislation – the Unsuitable Housing Order – which would have seen an end to the use of homeless B&Bs used as temporary accommodation, have been put in place due to Covid-19 restrictions. 

Though many councils have stopped using them, in one local authority they made-up 30 per cent of temporary homeless accommodation last year. Typically these operate with curfews which mean people cannot stay out after 11pm or spend a night away from the B&B without losing their room. On average homeless people spent 34 nights in a B&B but in Highland Council this was 387 nights on average according to official homeless statistics.

Some have reported that drugs are widely available in B&Bs and hostels and there is a lack of support for people struggling with mental health and addiction issues.

Alison Watson, director of Shelter Scotland claimed the figures showed “the grim reality that many people are experiencing as they are failed by our housing system”.

The housing charity has worked with people who were unable to access temporary accommodation due to the “extortionate charges”.

“Life can be a nightmare for people in temporary accommodation with no safe, permanent place to live,” Watson said. “We’ve seen wheelchair users trapped in upstairs flats, disabled children with no space to use their specialist equipment and adults who tell us that they do not feel safe where they are forced to live. 

“To add to this the amount of money it is costing people is just not good enough and this has to stop. We are urging the Scottish Government to ensure there is enough affordable housing for everyone who needs it.”

Pauline McNeill, housing spokesperson for Scottish Labour, said the figures showed “sweeping changes” were needed to tackle inequalities in the housing market.

She added: “This is another example of a broken housing market in Scotland in which an affordable home is beyond the reach of many and exploitation is built into parts of the system.

“I would question the practice of charging anyone placed in temporary accommodation. We should be supporting people into sustainable tenancies in good quality housing, not taking advantage of them when they need help.

“The situation becomes even more egregious when you consider some of these charges may be being made illegally.

But councils insisted that they were doing nothing wrong. 

We encourage local authorities to take a person-centred approach and to take individual circumstances into account when deciding how much to charge.

Scottish Government spokesperson

A City of Edinburgh Council spokesperson said it followed the Scottish Government Homelessness Code of Guidance on accommodation charges and affordability. 

They added: “Households accommodated in temporary accommodation by the council are assisted to apply for housing benefit where they qualify and to maximise their income. We take into account each individual’s circumstance, their weekly incomes and outgoing in setting the charge to ensure that they are affordable.” 

A spokeswoman for Glasgow’s homeless services added: “The council is permitted to make a reasonable charge for the provision of temporary homeless accommodation. When setting the rental charge for homeless accommodation the council has regard to the Homelessness Code of Guidance 2019. However, the guiding principle...is to set a charge which reflects the cost to the council in providing interim homeless accommodation.”

Stephen Llewellyn, head of housing solutions with North Lanarkshire Council said: “Being homeless or being threatened by homelessness is very distressing for anyone.

“We meet our statutory responsibility to assist people facing homelessness as an absolute priority. Everyone has different circumstances and we are committed to making sure any charges are reasonable, appropriate and aligned with individual circumstances following a full financial assessment. We are here to help and nobody should worry about facing homelessness on their own.”

A spokesperson for Highland Council said it had noted the contents of the report, adding: “The council considers that it is meeting its legal duties in providing temporary accommodation, including taking into account the affordability of accommodation for individual households.”

John Mills, head of Fife Council's housing services  added: "We review rents for temporary accommodation every year as part of our wider rent setting policy. There is no scope to charge different rental rates, but we help people who are having difficulty paying rent with support to make affordable payments."

Charges are “rightly and properly” a matter for individual councils, according to the Convention of Scottish Local Authorities (COSLA), “based on local need and circumstance” . “Charges by councils for homelessness services need to cover the funding tied up in the provision of the temporary accommodation as well as staffing costs,” said a spokesperson.

A spokesperson for the Scottish Government, said it expects local authorities to follow existing guidance, which “includes looking carefully at the needs and situation of the household before making any decision about any reasonable charge”.

“Local authorities share our ambition to ensure stays in temporary accommodation are short-term, and we will be working with them to achieve this. We encourage local authorities to take a person-centred approach and to take individual circumstances into account when deciding how much to charge.”

Where housing benefit and Universal Credit, which are the responsibility of the UK Government, did not cover rent, they encouraged homeless people to apply for Discretionary Housing Payments, provided by the Scottish Government and administered by local authorities. 

The full report

Photo Credit: iStock/VictorHuang

This story was produced in tandem with the Sunday National.

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