What is exempt accommodation?

Most people meet the phrase "exempt accommodation" when a Housing Benefit claim is questioned, a council starts asking for support records, or an investor asks why the rent on a shared house is three times the local rate. The idea is simple. The detail is where schemes come unstuck.

Where the name comes from

In January 1996 the government tightened the rules on how much rent Housing Benefit would cover for private tenants. Supported housing run by not-for-profit landlords was protected from those new limits so that the extra cost of running it could still be met. That protection is still in force, carried forward by Schedule 3 to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006. The definition sits in paragraph 4(10).

So "exempt" has nothing to do with tax, planning or licensing. It means exempt from the ordinary Housing Benefit rent restriction rules, including the Local Housing Allowance.

The four tests a scheme has to pass

The definition reads as one sentence, but in practice councils break it into four questions. A scheme needs a yes to all four.

1. The landlord is the right kind of body

The landlord has to be one of these:

• a housing association, including a registered provider of social housing
• a registered charity
• a voluntary organisation, meaning a body whose activities are carried on otherwise than for profit
• a non-metropolitan county council

A private company or individual cannot be the landlord, although they can own the building and lease it to one of the bodies above. A lot of disputes start here, especially where the landlord is a community interest company or sits inside a group of linked companies. We cover those in grey areas.

2. The resident receives care, support or supervision

Care, support or supervision is not defined in the regulations. Councils normally look for help that goes beyond what any tenant would get from a landlord. Examples include help to manage a tenancy, budgeting, linking with health and drug services, emotional support, and supervision for people whose behaviour or history puts them or others at risk.

Ordinary housing management, such as collecting rent, arranging repairs and handling neighbour complaints, does not count on its own.

3. The landlord, or someone acting for it, provides it

The support has to come from the landlord or from a person acting on the landlord's behalf. Where a separate support provider is involved, the paperwork matters. If the support provider is commissioned by the council and answers to the council, it may be acting for the council rather than the landlord, and the scheme can fail this test even though residents are well supported.

A written agreement that shows the landlord is responsible for arranging the support, with the support provider acting for it, is the usual fix. The agreement has to match what happens day to day.

4. The support is more than minimal

Case law, not the regulations, set this threshold. In the Commissioner's decision R(H) 7/07 the landlord's contact with tenants through a liaison officer was held to be minimal, and the claim failed. The same decision said the landlord does not have to be the main provider of support, as long as what it provides is more than minimal.

There is no magic number of hours. What helps is a clear record of what was delivered, to whom, how often, and why it was needed.

Exempt accommodation is one of four types of specified accommodation

Since 2014, Housing Benefit and Universal Credit rules have grouped supported housing into "specified accommodation". Exempt accommodation is category 1. The others are managed properties, domestic abuse refuges and local authority hostels.

The grouping matters because anyone living in specified accommodation gets help with rent through Housing Benefit, even if they claim Universal Credit for everything else. Our guide to the four categories of specified accommodation sets out the differences side by side.

How Housing Benefit works for residents

The resident, or the provider on their behalf, claims Housing Benefit from the council for the rent and eligible service charges. Universal Credit covers living costs. Support charges are not covered by Housing Benefit at all and are usually funded by a commissioner or, in non-commissioned schemes, built into how the service is run.

Because exempt accommodation sits outside the Local Housing Allowance, the eligible rent starts as the actual rent charged. The council can reduce it in two situations:

1. The rent is unreasonably high compared with suitable alternative accommodation.
2. The home is larger than the resident reasonably needs.

In Birmingham City Council v SS and SA (2016), the Court of Appeal said the comparison only has to be with suitable alternative accommodation. In practice that means accommodation offering similar support to someone with similar needs, not a general needs flat. Some residents, including older residents and people who cannot work because of illness or disability, have extra protection, and the council also has to consider whether a move would be reasonable.

If the landlord is not a registered provider, the council refers the rent to a rent officer. Housing Benefit paid above the rent officer's figure is not fully reimbursed to the council by the DWP. This shortfall is called subsidy loss, and it is the main reason councils look so closely at non-registered providers' rents.

What councils ask for when you claim exempt status

Requests vary by council, but most evidence requests come back to the same list. Having it ready shortens claims and reviews.

1. Proof of the landlord's status: charity number, registered provider number, or constitution and accounts for a voluntary organisation.
2. The lease or management agreement, showing who the landlord is and who is responsible for what.
3. Any agreement with a separate support provider, showing it acts on the landlord's behalf.
4. A breakdown of the rent into core rent, eligible service charges and anything ineligible.
5. Each resident's needs assessment and support plan.
6. Records of support delivered, with dates, times and what was done.
7. Staffing information: who delivers support, their hours and their training.

Why exempt accommodation has a bad reputation

Exempt accommodation pays for some of the most valuable housing in the country: refuges, recovery houses, homes for people leaving hospital and young people's schemes run by long-standing charities. It has also attracted operators who see a route to high rents with little oversight.

The growth has been concentrated. In Birmingham, the number of exempt claims rose from 3,679 in 2014 to 11,980 by 2018, and a council motion in January 2025 put the number of people living in exempt accommodation in the city at about 25,000. The London Assembly Housing Committee found around 17,100 households in exempt accommodation across the 22 London boroughs that supplied data in 2023, with boroughs spending at least £107 million a year.

The Levelling Up, Housing and Communities Committee called the system in need of urgent reform in its October 2022 report, and the National Audit Office reported in May 2023 that gaps in regulation meant some providers faced little scrutiny. The Supported Housing (Regulatory Oversight) Act 2023 followed.

What changes with licensing

The 2023 Act lets the government introduce national supported housing standards and a licensing regime run by councils. The government's response to its consultation, published in April 2026, confirmed licensing will cover supported exempt accommodation as the Act defines it, with licence holders required to meet the national standards. Licensing is expected to start in 2027.

Our guide to licensing and the national standards covers what has been decided, what has not, and what to do now.