Birmingham City Council faces serious allegations over its handling of housing benefits in the controversial “supported exempt accommodation” sector. Councillors accuse the council’s housing benefits team of being a “soft touch” and potentially enabling widespread fraud.
Two Labour councillors, Marcus Bernasconi and Shuranjeet Singh, contend that the council’s procedures make it too easy for non-compliant providers to open new properties. While the council presses the Government for tighter regulations to eliminate rogue landlords in this lucrative sector, local officials stress the importance of addressing internal processes too.
Birmingham sits at the heart of the exempt housing market, where shared houses and hostels cater to vulnerable groups such as care leavers, those with mental health challenges, addicts, ex-prisoners, and the homeless. Landlords receive premium benefits payments—often up to £400 per week per room—in exchange for promised tenant support.
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New figures reveal Birmingham hosts 12,166 exempt properties housing 33,904 people, mostly without prior city connections—far outpacing any other UK city. Six main providers dominate this sector, with five under scrutiny for failing to meet fundamental governance and financial transparency standards.
Cllr Bernasconi condemns the city’s proliferation of such housing as a failure of council oversight, noting that over £400 million in taxpayer funds flow into this sector annually. He warns the benefits team prioritizes quick approval over thorough scrutiny, making meaningful checks on the 30,000 active claims nearly impossible.
“There are allegations that providers have identified ‘soft touch individuals’ within the council who take a lax approach to benefit approvals,” Bernasconi states. “The Department for Work and Pensions pays these claims directly, so they don’t appear on council books, which creates a dangerous lack of oversight.”
Neighbourhoods face significant distress due to poorly managed exempt housing. Residents report crime, drug use, antisocial behavior, and home conversions that transform quiet streets into hubs of disorder and exploitation. Providers aggressively advertise vacancies online, sometimes offering cash incentives for referrals, fueling concerns about who truly benefits from the current system.
Bernasconi questions whether vulnerable tenants, affected communities, or unscrupulous landlords gain most, pointing out a suspicious display of luxury vehicles outside supposedly nonprofit enterprises. He stresses the need for both local reform and government action.
An internal council audit—commissioned earlier this year amid previous concerns—is underway but not yet published. Bernasconi demands transparency and swift action, highlighting police confirmation that organized crime links exist within these housing providers.
Cllr Singh echoes the call, describing the harmful transformation wrought by exempt accommodation in his ward and urging the city to take a stand against negligent operators and protect neighborhoods.
In response, Birmingham City Council defends its rigorous application processes, noting they often exceed standards found elsewhere. The Department for Work and Pensions has reviewed the council’s practices positively and aims to share Birmingham’s methods with other areas. However, the council acknowledges the wider sector’s need for better regulation and pledges to release the internal audit report as soon as possible.