01 April 2020 - Article
Bristol-based charity Alternative Housing came to unwelcome prominence in May 2017 when it topped a list of the UK’s most-prosecuted landlords compiled by the Guardian newspaper. The Guardian found that the charity, which had received thousands of pounds in housing benefit in connection with its object of ‘relieving those in need’ by providing them with accommodation, had been convicted of six breaches of housing regulations. These convictions included the ‘failure to ensure all parts of the property were maintained in a safe and working condition’, ‘failure to ensure the internal structure of the property was maintained in good repair’, and failure to ensure that water supplies, drainage systems, firefighting equipment and fire alarms had been kept in working order.
Although the Charity Commission was not responsible for investigating the convictions themselves, or the health and safety ramifications of the breaches, it did use its statutory power to open an inquiry into three key points of concern:
• Had the trustees of Alternative Housing complied with and fulfilled their duties and responsibilities under charity law?
• Had there been misconduct or mismanagement by the trustees in the administration of the charity?
• Had there been significant risk to charity property and/or beneficiaries?
The Commission served Orders under Sections 52 and 47 of the Charities Act 2011 to obtain information from the charity’s bank and trustees regarding the activities of the charity and certain housing companies with which it had been involved. Based on this evidence, it identified several instances of significant misconduct and/or mismanagement by the trustees.
First, Alternative Housing had reported that it was exempt from the legal duty to file accounts because its income did not exceed £25,000 per year, but analysis of its bank statements made it clear that this was untrue: the charity’s income had been £235,000 in the financial year to 2015, £269,000 in 2016, and £150,000 in 2017. Second, there was strong evidence of conflicts of interest between trustees of Alternative Housing and the directors of two housing companies to which the charity had paid substantial amounts of money. Of the three signatories on the mandate for the charity’s bank account, one was the sole director of one of the housing companies, which received £232,000 from the charity; another, a former trustee, was the former director of a social housing lettings company and one of the proprietors of the charity’s address. The other proprietor of the address was the sole director of the other company, which received £283,954 from the charity, and he and another trustee were the directors of yet another housing company. Third, the trustees had failed to ensure that its beneficiaries were safe in the accommodation managed by the charity, and the condition of the properties (as evidenced by the housing convictions) had in fact placed them at significant risk of harm.
The Commission concluded that there had been clear failures to submit accounts, recognise and declare conflicts of interest and deliver suitable accommodation to beneficiaries. It also noted that there had been a serious failure to cooperate with the Commission’s inquiry: only two of the six relevant trustees and directors responded to the Commission’s direction under Section 47 to provide information about the charity and the companies. This had hindered the inquiry and made it impossible to establish why the specific failures had occurred.
Alternative Housing was therefore removed from the register, on the basis that the housing convictions and apparent unmanaged conflicts of interest created a situation where an inference could be drawn that the trustees and directors had exploited charitable status, potentially for personal gain at the expense of the charity’s beneficiaries.