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HB and Exempt accommodation: unreasonably high rent

By Dave

I admit that SS v Birmingham CC [2013] UKUT 418 (AAC) has been on my to do list for a while and that, possibly, the main reason for finding the time to write it up is because I’m on a two hour strike (#fairpayinHE).  But, it is a really quite important case about the application of the unreasonably high rent rule for “exempt accommodation” in Reg 13 and Sch 3 of the 2006 Housing Benefit regs.  The principal question of law concerns the meaning of “suitable alternative accommodation” in those regs.

Roshni is a charitable organisation providing a women’s refuge for women from the South Asian continent.  They lost their Supporting People funding in 2010 (roughly £120k) and employed a consultant to work out the costs of providing accommodation and housing services to their clients.  The actual rent was increased in line with this assessment to £257.87 of which £132.80 was core rent and £109.37 was service charges for which HB was also payable.  Birmingham sought to restrict the eligible rent in line with the unreasonably high rent rule to £179.20, relying on five other comparators of suitable alternative accommodation, whose rent ranged from £140.75 to £210.16.  Oddly, it seems that Birmingham applied the reduction in relation to the service charge element in their original decision (I say oddly because the service charge was actually less than that applied by at least some of the comparators – not great decision-making, I’d say, but possibly justified by the lack of clarity in what is included in the “service charge”, see [16] – and Birmingham conceded this point in the FTT).

The FTT decision was a mess on the facts and clearly wrong, as Judge Mark points out (quite nicely).  The key issue in the AAC, though, was whether the five comparators were appropriately used as such bearing in mind that those comparators may well have received public subsidy.  Judge Mark effectively distinguished R v Coventry CC ex p Morgan, QBD, 07.07.1995 (in which Collins J held that public sector accommodation was not an appropriate comparator for private sector rents) by restricting the ambit of that case to comparing like with like “so far as practicable” ([28]) or “so far as reasonably possible” ([32]).  Where there are no relevant unsubsidised comparators, it is “permissible and necessary” to look at subsidised rents.  But, at [33], here’s the rub:

[F]or an unsubsidised rent to be unreasonably high in comparison with that charged by the subsidised landlords, it would normally have to be shown that the size of the rent exceeded what the other rent could be expected to have been but for any element of discount.  I do not totally rule out any other possibility, for example where a subsidy has been lost because of some wrongdoing by the landlord, particularly where there is no shortage of suitable subsidised accommodation.  However, the present case concerns refuges for women against whom violence has been perpetrated.  The number of places needed in hostels for such women and their children may well exceed the number of places for which public funding is available, particularly at a time such as the present when public funding is being substantially reduced across the board.  Many if not most of those availing themselves of such accommodation would need to obtain housing benefit to pay the rent.  Without housing benefit, and without being subsidised by public or private funding, a charity could not operate a hostel that was needed to cater for those who could not get into a funded hostel because it could not recoup its reasonable operating costs.  This would leave victims of violence either homeless or at risk at the homes they wished to leave.

So, it seems that, bar wrongdoing, the subsidy element needs to be taken away and the purpose of the organisation considered in that determination, including its reliance on HB.  The burden of proof is, of course, on the Council seeking to exercise this discretionary power.  In this case, Birmingham had not done so on the facts available to Judge Mark.



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