Companies exploiting welfare system by using residents as 'cash cows,' BBC finds

Some private companies are making huge profits and exploiting the welfare system by receiving housing benefits on behalf of residents but failing to give them the support they're required to, BBC Panorama has found.

Property agents are drawing people into the taxpayer-funded system using social media videos that offer free rooms, PlayStation consoles and even holidays.

The system - called supported exempt accommodation (SEA) - is designed for people in the UK with additional needs, including former prisoners, people recovering from addiction and women fleeing domestic abuse. It provides housing along with care, support and supervision.

For many residents it works well to help them get back on their feet, but charities, politicians and residents tell us parts of the system are being exploited.

Many vulnerable people are being used as "cash cows to generate income" that goes from the Department for Work and Pensions (DWP) into "the back pocket of the landlords", said Patricia Coleman-Taylor, who runs Birmingham anti-poverty charity Narthex.

Panorama has learned the DWP paid out £410m for SEA in Birmingham alone in the last financial year.

The city is the epicentre of the sector, with more than 34,000 people living in SEA. For context, in London about 22,000 live in supported housing despite its population being more than seven times larger.

Labour MP Jess Phillips, whose Birmingham constituency contains large numbers of these properties, said companies spending taxpayers' money while providing a poor standard of support was "an absolute catastrophe" and bad landlords "can make loads of money".

But she added that there are some housing providers who "get this money who are absolutely providing supported accommodation".

The leader of the city council, Liberal Democrat Councillor Roger Harmer, told us that "taxpayers' money is being wasted. It's a scandal."

In Birmingham, BBC Panorama's investigation found:

Vulnerable people are being left with little to no support in often unsuitable accommodation

One big housing provider wrote off £1.8m because of payments to some former directors and companies they ran

Evidence that some are willing to make benefit claims for people who do not live in their properties

Supported accommodation was set up for people like Alysha.

When she escaped a violent marriage, she returned to Birmingham seeking shelter. But her family did not have room so she had to look elsewhere.

Alysha lived in three different SEA properties, including a shared house managed by a company called Second City Support Ltd.

Things soon started to unravel, she told us. Last December, residents of the house went eight days without any heating or hot water when the boiler broke, she says.

"I was at my wits' end. I'd be begging [Second City] and they would just cut the call because they didn't want to deal with it."

As a survivor of domestic abuse, she also wanted help to get her life on track, including looking for a job, but said there was no support from Second City.

By law, the registered provider of the accommodation only needs to offer "more than minimal" care.

"On the [social media] adverts, they will often say that you have weekly support sessions, help with GPs. It's not the case at all, they're not interested. They come, they want you to sign a paper to say, yes, Alysha's gone to support [sessions] this week."

A closer examination of Alysha's shared house shows how taxpayers' money is used and how companies in the system can make money in other ways too.

The registered provider of the supported exempt accommodation was Dawson Housing, a not-for-profit.

Dawson Housing was being paid £443 a week in housing benefit from the DWP - which it received via Birmingham City Council - for Alysha's room and her support costs, equivalent to £23,000 a year.

Dawson Housing hired Second City Support Ltd to manage it and deliver her support.

Why are vulnerable people, including victims of domestic violence and those facing homelessness, not getting the supported housing they’ve been promised?

Separately, a sister company, Second City Housing Properties, had bought and sold the house for a substantial profit.

Land Registry records show it bought the property for £191,000 in 2024 and sold it a year later for £410,000.

Both Second City companies are owned by Darren Davey. He told Panorama that his company had spent about £150,000 on renovation and other associated costs, prior to the sale.

Davey has been very successful in profiting from housing vulnerable people in recent years, operating in both the supported exempt and temporary accommodation sectors.