Where a possession order is sought under Ground 16 Schedule 2 Housing Act 1985 (under-occupation on succession), what happens to the tenant’s right to buy? And is this a factor in weighing the suitability of alternative accommodation and the reasonableness of making an order?

Manchester City Council v Benjamin [2008] EWCA Civ 189, a Court of Appeal judgment out today, has some answers, but far from all of them.

The situation was, briefly, that the Defendant had succeeded to her mother’s secure tenancy of a six bed house. The only occupants, post succession, were the Defendant and her one child, although evidence was heard that she intended to foster. The Claimantserved an NSP on grounds that the property was more extensive than the tenant reasonably required, the Claimant applied under the right to buy shortly afterwards.

At first instance, there was no dispute that the property was more extensive than required. Alternative 2 and 3 bed accommodation was offered (but this was due to be transferred to a housing association under a stock transfer some months later).

The Defendant maintained that the alternative property was neither suitable nor reasonable and counterclaimed for an order compelling the Council to convey the property to her.

Proceedings were under s. 85 HA 1985:

“(1) The court shall not make an order for the possession of a dwelling house let under a secure tenancy except on one or more of the grounds set out in Schedule 2.

(2) The court shall not make an order for possession–

…

(c) on the grounds set out in Part III of that Schedule (grounds 12 to 16) unless it both considers it reasonable to make the order and is satisfied that suitable accommodation will be available for the tenant when the order takes effect;

The Defendant held that if her tenancy of the property was ended by possession order, she would not be entitled to the right to buy at the new property until a fresh qualification period had expired (5 years) or, if the new tenancy was an assured tenancy, under more limited and less advantageous terms.

S.121(1) HA 1985 provides:

“The right to buy cannot be exercised if the tenant is obliged to give up possession of the dwelling-house in pursuance of an order of the court or will be so obliged at a date specified in the order.”

The first instance Judge held that this meant that the Defendant would have to start afresh and the 5 year period would not have expired by the time of the transfer to the HA. This in itself was enough to render the alternative accommodation unsuitable.

On reasonableness, the Judge found that the Council had not provided sufficient evidence to make clear that possession was required for the better managment of its housing stock, or the length of the waiting list for such properties. Instead it looked like the Council was simply seeking to avoid the loss of the property under the RTB provisions and, following the statement of Neuberger J in Basildon District Council v Wahlen [2006] 1 WLR 2744, held this was an impermissible jsutification.

At first instance the claim was dismissed and an order for conveyance made. INitial permission to appeal by the Council was refused, and again on the papers, but a renewed application to Arden J suceeded.

The Court of Appeal, in three separate judgments, found that it was both reasonable to make a possesion order and the alternative accommodation was suitable.

S.121(1) did not mean that the right to buy was extinguished by a possession order under Ground 16. Apparent findings to the opposite in Basildon v Whelan and in Kensington & Chelsea RLBC v Hislop [2004] HLR 434 were not part of the ratio of the decisions in those cases. LJ Dyson found that:

56. The use of the definite article in the phrase “give up possession of the dwelling-house” is significant. It is in respect of that dwelling-house that the right to buy cannot be exercised. If it had been intended that an order to give up possession should be a bar to the exercise of the right to buy any dwelling-house, then the subsection would have been drafted rather differently. It would have provided that, where a tenant is obliged to give up possession of a dwelling-house in pursuance of an order of the court, the right to buy cannot be exercised in respect of any dwelling-house.

Sir Peter Gibson gave the lead judgment, finding that the right to buy was not extinguished and the the first instance Judge had not performed the balancing exercise of ‘reasonableness’ properly. In particular, it was not right to set out a stark distinction between the better managment of the housing stock and the wish to avoid a reduction in that stock, particularly in the circumstances of a single person and child occupying a six bedroom property (para 37)

Sir Robin Auld agreed with the conclusions of the others, but considered that there was an issue that had not been addressed, at first instance or in the appeal, which is whether the loss of the right to buy would, per se, render alternative accommodation unsuitable. The circumstances, he considered, may well arise where alternative accommodation is offered that does not carry the right to buy (para 47).

I must confess myself puzzled here, as para 1 of Part IV of Schedule 2 requires that any alternative accommodation proposed must be consist of premises to be let as a separate dwelling under a secure tenancy. Surely, it would also therefore carry the right to buy?

So, as far as I can see, loss of right to buy is gone as a defence to Ground 16 possession claims, but, on the plus side, the right to buy already established is preserved into the new tenancy.