Why we’re increasing our guardians’ licence fees

Back in early 2020 we were due to roll out increases to licence fees across our portfolio…and then Covid-19 hit. The economic uncertainty that we knew many of our guardians faced due to the pandemic meant we didn’t increase our fees at that point in time.

Now, two years later, we’re at the stage where we have to increase them. This is partly for our own financial sustainability as a business, and partly because we need to bring older, lower fees in line with newer ones so guardians are paying similar fees for similar properties. So we have reviewed fees for all of our guardians, and are increasing fees in several areas from April.

Under our previous structure, the lowest fee an individual could pay to live in one of our properties was £185pcm and the highest was £860pcm – both including council tax and the latter including utilities. Now, after the review, the lowest fee is £325pcm and the highest – to live alone in a three-bed flat in Queen’s Park – is £895.

How we set our fees

Anyone who has ever rented is likely to think these fees are very low, and, indeed compared to the private rented sector they are – typically we set our fees at 50%-66% of local market rates.

Of course, we appreciate that there are several factors that can make guardianship less attractive than renting, and we take that into account when setting our fees. These factors can include:

• The cosmetic condition of the properties – they have to meet the same safety standards as a private rental sector but often will need painting, white goods etc.;
• The fact guardians can be given 28 days’ notice to leave, and have non-exclusive use of their property;
• Additional rules which ensure guardians are keeping properties safe for their owners and are unlikely to cause disruption of neighbours e.g. no long absences, a restriction on having parties and pets, no under-18 guests.

Dot Dot Dot is also unique in the property guardianship sector for requiring that our guardians commit to volunteering at least 16 hours a month for a good cause of their choice. This is an important part of life as a Dot Dot Dot guardian, and we are only a suitable choice for people who will find this both manageable and rewarding.

The reaction and what it means for guardianship

Some of our guardians were very unhappy both about the level of the fee increases, and the time they were being given to decide whether to sign a new licence or find new housing.

All guardians know that property guardianship is temporary, and that both parties can give each other just 28 days’ notice to quit at any time and for any reason. Our licence agreements state we must give our guardians four weeks’ notice of a fee increase. Initially, we gave people six weeks’ notice before they would need to pay new fees or to move out, but we increased that to ten weeks when guardians reacted negatively to our initial timeline.

As it turns out, the vast majority of guardians have accepted their new fees, even when those increases have meant they will be paying nearly or slightly over double what they currently pay. However, we have fielded a lot of questions on:

Our timing: 

There is never a good time to increase prices – but we think increasing fees would have been even more unpopular during the most uncertain days of Covid-19. Costs both for guardians and for Dot Dot Dot are set to rise in the year ahead, and it is important to address the inconsistencies in our fees now, rather than store up further challenges for the future.

Our business model: 

Because the pandemic affected many of our guardians’ ability to pay for their housing, we made a small loss in 2020-21, and are set to lose money again in 2021-22 before returning to generating a surplus in 2022-23. We plan carefully so that difficult years do not create risks for Dot Dot Dot or for our guardians, but it’s important that we return to a sustainable level of income. Increasing our fees is just one factor in improving profitability, as well as implementing our own savings.

The requirements and rules that apply to guardians: 

Some guardians have questioned why we need to conduct inspections, why they are subject to other restrictions such as having to tell us if they’re going to be away from the property for more than three days, and why they need to volunteer.

Guardianship is intended to provide temporary occupation of properties in a way that provides security and reassurance to owners. So that means we need to regularly conduct unannounced inspections to ensure properties are being properly occupied and cared for. Our right to do that is one of the factors that differentiates guardians from tenants. Our guardians also need to provide a visible security presence, and any prolonged absence reduces their ability to do so.

Our rules and requirements are intended to make guardianship viable and effective. Guardians need to consider these carefully before committing to a licence.

With respect to volunteering, we want to offer people who give something back to society inexpensive housing, and we believe socially-minded guardians are likely to look after their homes and be good neighbours

What we’ve learnt

1. Fees must be reviewed regularly – at least annually – both to reflect increased Council Tax and utilities costs as well as changes to the property market, so there is not the same need in future for a fundamental reset.
2. Our approach to setting fees is largely appropriate – our new fees are acceptable and attractive to most existing and, crucially, potential new guardians. So, despite some complaints, we have faith in the methodology we used.
3. Guardianship is still not very well understood as a legal status. We have seen several articles and social media posts referring to guardians as “tenants”, to their fees as “rents” and even to them being “evicted” when they have simply been served notice in line with their contracts. So we need to keep on educating people about the differences between guardianships and tenancies.

We have always made a concerted effort to educate applicants about what they’re signing up for – in particular, that they can be given 28 days’ notice at any time and for any reason. Everyone is asked to provide a move-on plan in the event notice is given, and it should mean that everyone should have other housing options should they not be able or willing to pay new fees.

Guardianship won’t be for everyone, but it’s provided an excellent temporary housing solution for many hundreds of people over our 10 year lifespan, and we hope it will do so for years to come.

Dot Dot Dot Property Guardian Standards

Part of our mission as a social enterprise is to push up standards in the property guardianship sector. One of the ways we try to do this is to clarify and publicise the legal rights that all current and prospective guardians have.

Learn more