What is the process for agreeing exempt rent levels for SSH tenants?

Exempt rents are approved by local Housing Benefit (HB) Officers.

Because exempt rent levels are higher than other forms of social or affordable rents there is a far greater degree of scrutiny over exempt rent levels. This is designed to protect taxpayer funds.

In simplistic terms, developments eligible for exempt rents must be; specially adapted for people with daily care and support needs; must be managed by a Registered Provider; and care and support services must be provided to a reasonable degree. In other words, the buildings are more expensive to design and build, and they also require (non-lettable) additional space for on-site care and support.

You should build a fully costed development appraisal for your proposed scheme. This lists out all capitalised costs of delivering the scheme. On top of this you add your own profit margin. There’s no formal limit to development profit margins, but they need to be ‘acceptable’. In practise this tends to be around 10-15%. Above this, and HB officers will (quite rightly) ask for justification. Working backwards, and based on the number of units in the service, you can calculate the first year rent per person per week (£pppw) required to make the scheme viable.

It is this figure (or figures if the scheme has a mix of accommodation types) that is reviewed by the HB Team.

Your preferred RP will want to take the lead on discussions with HB. Your role is to provide the RP with your rent requirements and your full cost justification. They will present it and justify it.

In our experience of sensitive or contentious projects, we often try to set up an early and informal call/meeting with the HB Officers ourselves. We present a 100% open book set of costings, and have occasionally asked one of the senior commissioners to join the meeting to explain first hand why the scheme is so important to the council.

HB will tend not to confirm rent levels following a meeting. They will say something like “the proposed rents are in line with our current rent levels”. This will be about as positive a steer you can expect to receive from HB. The main reason being that HB are unable to confirm exempt rent levels until they have an actual request from an actual tenant living in an actual property.

This is one of the areas that makes first-time SSH developers most uncomfortable. However, your RP will have seen this hundreds of times before. They will know from experience whether a response from HB is sufficient to support the risk and investment to deliver a successful SSH service.