Exclusive: Council investigating 'serious allegations' about the companies housing Manchester's homeless
We posed as landlords to find out how firms making millions from 'temporary accommodation' are operating
Dear Millers — when we published our long read about Manchester’s homelessness crisis this weekend, there was one area we left mostly unmentioned: the companies providing “temporary accommodation” or TA to the council. In today’s story, we meet two of them, both of which have been paid huge sums of taxpayers’ money in recent years.
When we posed as landlords offering to rent them our terraced houses in Manchester, both companies offered to help us evict our tenants so that the properties could be leased to the council as TA. Are the companies making millions from TA “creating homelessness” themselves?
We tried to find out.
Council investigating ‘serious allegations’ about the companies housing Manchester's homeless
By Joshi Herrmann
I was taken by surprise. Interviewing Manchester's new council leader Bev Craig in her office in June, she said something that seemed to confirm a hunch I’d had for months: that the system being used to house homeless people in “temporary accommodation” might actually be making the problem worse.
It was a theory we had been trying to corroborate from very early on in our six-month investigation into homelessness. Then Craig just came out and said it. What was the council doing to bring down the massive number of people living in temporary accommodation, or TA, I asked Craig? (Just a reminder: TA is emergency housing that councils use when people become homeless.) She said they were “working with some of those private landlords and make sure that it's not an incentive to rent out temporary accommodation rather than keeping a family in a home”.
“I think sometimes there is too much of an incentive for landlords to do that,” she added. “So we’re going to be clamping down on that.”
“Make sure that it's not an incentive to rent out temporary accommodation rather than keeping a family in a home.” What did Craig mean?
My gut feeling at the beginning of this investigation was this: the number of homeless households living in council-provided TA in Manchester was so high — up from around 400 households in 2014-15 to more than 2,500 at present — that it had to be distorting the housing market in some way. You can't house 2,500 households in a few grotty old hotels that used to be patronised by travelling football fans. Accommodating that many families has to mean using thousands of houses that were previously rented out on the private market or were owner-occupied.
It turns out, that is exactly what is happening. Of course, some of the TA paid for by the council is in grotty old hotels. There's a particularly depressing one which we visited in Fallowfield, for example, where the council spends an eye-watering £2,500 per room every month (a figure which includes both the rent and the support workers) to put up around 30 families. It's an arrangement highlighted for its strikingly poor value by the internal Gray Report we wrote about in our weekend read (this article will make a lot more sense if you've read that piece).
But according to our analysis, the bulk of people housed by the council in TA are living in regular family homes — typically two-bedroom terraces in the cheaper neighbourhoods of north Manchester or outside the city in boroughs like Oldham, Rochdale or Tameside. These homes are leased to the council by large property companies, some of whom are being paid millions of pounds each year.
Who owns the houses? Some of them belong to the property companies themselves and the rest are leased from private landlords. The property companies offer landlords a tempting deal: a guaranteed rent — usually in the £600 to £700 range — each month; long-term contracts if they want them; all damage repaired; and all without the hassle of having to deal with normal tenants. “No more calls from tenants — we deal with all of that for you at no extra cost!” one of the companies boasts online.
These companies are effectively working as middle-men: they get big homelessness “dispersal” contracts from the council and then they find as much cheap housing as possible to make it available for TA. Or, to phrase it differently, in the name of tackling homelessness, our council tax is being given to property companies who have collectively taken thousands of homes off the market in order to rent them to the council as emergency homelessness accommodation. If you're thinking that this sounds like it might be counter-productive, you're not the only one.
When Craig referred to “an incentive to rent out temporary accommodation rather than keeping a family in a home” she seemed to be suggesting that some landlords are actually evicting families from their homes in order to make them available for TA.
Is that happening? We haven't found direct evidence of it, although it sounds like Craig and the council have. What we have found is that two of the property companies that are making millions a year from the council are willing to assist private landlords in removing their existing tenants in order to turn their homes into TA. In both cases, we approached the companies posing as a landlord with a tenanted property, and in both cases the companies were willing to help us get our tenants out so the properties could be leased to the council.
"I can help out, but it's an unofficial: 'we will assist you with it'" one staff member said, before adding: "It's not a service that we offer." The other company, which made more than £4.5 million from the council for TA last year, told us about someone who has helped them remove tenants from many properties by serving eviction notices.
When we told the council about these exchanges on Monday, they said they were "not aware of the allegations made against the named property management companies" and added: "We will be contacting the companies to discuss these serious allegations further."
'That would be creating homelessness, and that's not something we want to be involved with'
On Monday morning, we interviewed the co-founder of one of the main companies used by Manchester City Council to house homeless households. Based on our analysis of documents where the council discloses payments to outside entities, this company has been paid £4.1 million since March 2020, and its glossy website says it is committed to providing accommodation for the most vulnerable people in society.
I told the company’s co-founder what Bev Craig had said, and asked if he recognised the problem she described. Would his company ever help a landlord to get rid of tenants in order to make a property available for TA?
“No, absolutely not,” he replied definitively. “That would be creating homelessness, and that's not something we want to be involved with.”
What he didn’t know is that we had already asked that question, but in the guise of a landlord rather than a journalist — and got a different answer.
The company is called HSPG, and it was founded in early 2015 by Guy Horne and David Searle, two young entrepreneurs who have been friends since attending Manchester Grammar School together (the H stands for Horne, the S stands for Searle and the PG stands for Property Group).
According to the company’s website, the pair “set out to solve the UK homeless crisis, believing everyone should have access to a comfortable and safe home” and soon they had bought a terraced property in Moston. “The property was refurbished and subsequently let to a homeless family,” the website says. 2015 was the year that Manchester’s homelessness crisis became very noticeable, with widespread rough sleeping and the number of households in TA starting its spectacular climb.
In 2016, Horne and Searle formed a new arm of the business called Housing Social. The company’s website explains that they “partnered with Manchester City Council to provide high-quality, temporary accommodation for Greater Manchester’s homeless families, whilst offering landlords a guaranteed rental income with no management fees.” So, on the one hand they were providing TA to the council at a time when it wanted more and more of it. On the other hand, they were able to provide many more houses than they actually owned by renting them from private landlords.
By 2019, the company had a staff of 18 and a new city centre office — and Horne was appearing on Sky News to talk about homelessness in Manchester. The next year HSPG bought a housing association and secured a £30m credit facility to fund its national expansion. Nowadays the company has 48 staff and has opened offices in London and Leeds, where Searle says they are “trying to get inroads into the Yorkshire councils”.
“I love that HSPG connects institutional, multi-billion-pound capital to help vulnerable people,” Horne told one interviewer, referring to the big financial investors who have backed their model. In Levenshulme, the company has converted a former office building into TA, a scheme which Manchester City Council says it wants to replicate elsewhere.
During our call, Searle explained how Housing Social works very clearly: "Say you're a landlord, you're renting the property out, you've got the management to deal with, you've got issue with rent arrears, the tenants might not pay,” he said. “So the model is, rather than someone renting out the house privately, they can give us the property. We then give it to Manchester City Council, it helps the council's homelessness problem and the landlord doesn't have to worry about rent collection, because every week we get the rent from the council."
It’s clearly a very good business model, and there’s no doubt that HSPG/Housing Social is providing the council with a lot of what it wants. But I was struck by the phrase “rather than someone renting out the house privately, they can give us the property”. It seems like an admission of something important, albeit obvious: that if these properties weren’t being used for TA, many of them would be rented out in the private rented sector. Where, as we know from fast-rising rents, decent homes are in great demand. In fact, when we spoke to David Ashmore, the council’s Director of Housing Operations, earlier this year, he specifically cited lack of housing supply as one of the drivers of homelessness in the city.
Searle was very clear that his company would never help a landlord to evict a tenant (“That would be creating homelessness”), but I asked him again: does he worry that the Housing Social model might create some perverse incentives? “If we found out a landlord was evicting someone to then give us the property, we wouldn't take it because we're about alleviating homelessness and that's creating homelessness,” he told me. “And the council have the same policy. Otherwise there's a vicious circle where someone could be evicted from the house and then end up in the same house through Temporary Accommodation, which is what nobody wants.”
To be clear, we have not unearthed evidence that the almost comically dystopian scenario outlined by Searle is actually happening: tenants being evicted and becoming homeless only to be offered the same property by the council as TA. And there’s no suggestion that HSPG is breaking any rules or even that it is particularly unusual. It seems from our reporting that a cluster of companies are operating on the same model in Manchester, it was just easier to find HSPG because they have a fancy website that explains show the company works and because they do a lot of PR.
‘Hopefully you can get them out’
When we called Housing Social posing as a landlord in May, we were given a different impression. "I can help out, but it's an unofficial: 'we will assist you with it'" the staff member said when we asked about removing an existing tenant. According to HSPG’s website, that staff member is “responsible for managing the Housing Social department.” His first question was whether we had any issues with the tenants, like bad behaviour or damage, to which we answered that we had experienced a range of issues.
“We can assist with it. We can guide you on that process,” the staff member said when we returned to the question of emptying the property. “Hopefully you can get them out, and when it's vacant we can onboard the property very very quickly,” they later added.
When we told HSPG about this exchange yesterday, a spokesperson said: “As a company founded with the goal of helping everyone have access to a comfortable and safe home, this practice would be entirely at odds with our team’s approach, mission and values. It is not reflective of our policy and we do not authorise or tolerate this practice.”
A Manchester City Council spokesperson said: “We are not aware of the allegations made against the named property management companies. We would never knowingly accept properties where a non-fault eviction has taken place. The Council does not condone or support any type of non-fault eviction and we will be contacting the companies to discuss these serious allegations further.”
The council also told us that all the providers they work with are made aware that it is not acceptable to offer properties as TA if they have been the subject of no-fault evictions. They said that in light of our allegations, they are looking at including further checks on applications where such evictions have taken place.
The statement from the council was also a response to allegations we raised about another company we spoke to for this story — one that seems to operate a similar model but with much less fanfare. It has a very basic website, where clicking on the “Our services” and “Meet the team” links doesn’t lead anywhere.
Accommodation Links was revealed as one of the biggest providers of TA by some great reporting by The Meteor earlier this year, receiving £4,595,400 from the council in the 2021-2022 financial year. According to the council, Accommodation Links provides TA properties across the city (in the M8, M9, M11, M12, M14, M16, M18, M19, M20, M22, M23 postcodes) and also in Bolton, Bury, Oldham, Rochdale, Tameside and Salford.
As the Meteor put it:
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.
When I turned up to the company’s shabby office just off Stockport Road on Monday, the middle-aged man who greeted me identified himself as Syed and said he was the owner of the business. No one else was in the office and Syed said the company’s call centre — which tenants might call if they have a problem — is based in Pakistan to save on costs.
I enacted the same routine: I had a tenanted property in south Manchester and had heard about the guaranteed income deal offered by Accommodation Links. Syed said the guaranteed income arrangement is only available if the property is empty, so that he can rent it to Manchester City Council as TA. Could he help with evicting tenants, I asked? Like the agent from Housing Social, he asked if we had had any problems with the tenants? I was having a few yes, I said, but mostly I just wanted a rental income that would come with less hassle.
“I will provide you with the contact details of the person who will really good assist you in serving the notices,” Syed said. He said this person is not a lawyer but someone who used to work for Salford City Council in its legal department. “I get my work done with him, so I can give you his contact details and you can, if you want to, use him,” Syed said, referring to the man by name (we have so far been unable to identify the man in question, so we are not naming him).
The man would charge around £400, Syed said, and if I had the right paperwork for the house (like gas certificates, etc), the eviction would be “a straightforward thing”. He mentioned another businessman who rents a large number of properties to the council, and said they had both used the same evictions expert. “He has been doing it for [named businessman] and me,” he said. “[Named businessperson] owns about 1,000 properties and I've got a similar portfolio. So I mean, if we are recommending you, then we know what we are doing. So don't worry about it.”
“He's done this hundreds of times before?” I asked?
“Yes,” Syed said.
When we contacted Accommodation Links to get their response to this story, a lawyer instructed by the company said:
The account you have given is one-sided, incomplete and lacking in context. It should be borne in mind that you obtained this information by fraudulently presenting yourself as a landlord. The version you have given of the conversation is a summary of a longer discussion. It is not legitimate for you to jump to the sort of conclusions you appear to be contemplating from the information you were provided with.
They went on: “Our client has no responsibility for whatever the local homeless situation is and it would wholly false for you to suggest otherwise.” And they said that if we published this story, they would report us to the police for fraud.
Provided we have not been arrested, we will return to this story when we have learned more. If you have some information, please get in touch (email@example.com) and I’ll reply when I’m back from leave. We are turning off the comments on this post to avoid any legal issues.