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42 BR Housing Law Bulletin

Samuels v. Birmingham City Council [2019] UKSC 28: non-housing benefits, shortfalls & affordability

Mathew McDermott looks at the Supreme Court’s judgment dealing with the approach to affordability under Part VII Housing Act 1996

Facts

Birmingham City Council came to consider an application from Ms Samuel (who had four children) under Part VII Housing Act 1996 following her leaving a property that she let under an assured shorthold tenancy. She left following receipt of a notice, having accumulated arrears of rent. Her position was that it was not reasonable for her to continue to occupy that property because it was not affordable. In particular, there was a shortfall between the rent and her housing benefit of £151.49 per month. Birmingham disagreed, finding that it was affordable and that she was intentionally homeless because she had ceased to occupy the property as a result of the rent arrears.

Ms Samuels had her appeals dismissed by both the County Court and the Court of Appeal and, after significant delay due to funding issues, the matter came before the Supreme Court.

The central issue in the appeal was whether the authority had adopted the correct approach in determining that the accommodation was “affordable”, with much focus on the matters laid out in The Homelessness (Suitability of Accommodation) Order 1996 (SI 1996/3204) (“The 1996 Order) in respect of ‘affordability’.

The argument

Much of this focused on the policy development in respect of social security benefits (housing- and non-housing related) and, in particular, a rising discrepancy between the level of rents and the level of social security benefits (especially housing-related benefits) and how the Courts have approached the core purpose of certain benefits.

These policy arguments formed the backdrop to an important submission made by the Appellant, namely that it was wrong in principle for the council to treat Ms Samuels’ non-housing benefit as containing a surplus which could be treated as available to make up shortfalls in housing benefits. The argument was that benefits are set at subsistence levels so, it was argued, non-housing benefits should not be viewed as available to meet any shortfall in the rent once housing benefits have been applied.

Also central to the appeal concerned the interpretation of one part of the Code of Guidance (as it then applied), namely paragraph 17.40:

“In considering an applicant’s residual income after meeting the costs of the accommodation, the Secretary of State recommends that housing authorities regard accommodation as not being affordable if the applicant would be left with a residual income which would be less than the level of income support or income-based jobseekers allowance that is applicable in respect of the applicant, or would be applicable if he or she was entitled to claim such benefit."

Birmingham’s response to the submission concerning non-housing benefits was to point out that The 1996 Order requires no such selective approach – nor does any other policy statement. Nowhere does it say, Birmingham argued, that non-housing welfare benefits cannot be used to meet housing costs, nor taken into account in assessing the affordability of rented accommodation.

This was a submission that the Court accepted (see paragraph 34), although the Court did accept that benefits are not generally designed to provide a surplus above the subsistence needs of a family.

The authority tripped up, however, in how it approached the shortfall, and the point is summarised neatly in paragraph 36 of the Supreme Court’s judgment:

“However, the question was not whether, faced with that shortfall [between the rent and housing benefit], [the Appellant] could somehow manage her finances to bridge the gap; but what were her reasonable living expenses (other than rent), that being determined having regard to both her needs and those of the children, including the promotion of their welfare. The amount shown in the schedule provided by her solicitors (£1,234.99) was well within the amount regarded as appropriate by way of welfare benefits (£1,349.33). In the absence of any other source of objective guidance on this issue, it is difficult to see by what standard that level of expenses could be regarded as other than reasonable."

Conclusion 

Despite the interesting argument concerning the Code as it then was and the approach to be taken in light of welfare benefit policy developments, the Review Decision was ultimately quashed because of a straightforward error in the approach to the crucial question of “affordability”. The officer erred when considering that there was sufficient ‘flexibility’ in the Appellant’s household finances to meet the shortfall (basically: ‘pay less here or there and you would have more to pay your rent’). Similarly, it was also stressed that this is an appeal relating to a particular decision, made more than five years ago, on the information then available to the council, not a general review of the law and policy in this field.

Having said this, certain points of general application can be extracted: 

  • First and foremost, when looking at The 1996 Order and affordability a review officer must take account of all sources of income, including social security benefits;
  • There is nothing in The 1996 Order which requires or justifies the exclusion of non-housing benefits of any kind; 
  • Affordability must be judged on the basis that the accommodation is to be available indefinitely: see R (Aweys) v Birmingham City Council [2009] WLR 1506);
  • Once this assessment is complete, the officer should then compare that with the applicant’s “reasonable living expenses”;
     
    This assessment of what is ‘reasonable’ will be objective. It will not depend on the reviewing officer’s subjective view of those living expenses.

 

DISCLAIMER: This bulletin is no more than a summary of the topic or topics, chosen selectively for the purposes of discussion only. It is not legal advice and should not be treated as such. It should not be relied or acted upon in any respect. Recipients should always seek legal advice if proposing to take action following this commentary.

More about the author Mathew McDermott


13.06.2019