Affordability of previous accommodation

The Court of Appeal has analysed what local authorities can take into account when considering the affordability of previous accommodation for the purposes of deciding whether a person is intentionally homeless for failing to pay the rent. Jonathan Manning and Emily Orme report.

Law

By section 191(1), Housing Act 1996, a person becomes homeless intentionally “if he deliberately does or fails to do anything in consequence of which he ceases to occupy accommodation which is available for his occupation and which it would have been reasonable for him to continue to occupy”.

Article 2 of the Homelessness (Suitability of Accommodation) Order 1996 (“the 1996 Order”), provides as follows:

“In determining whether it would be, or would have been, reasonable for a person to continue to occupy accommodation … there shall be taken into account whether or not the accommodation is affordable for that person and, in particular, the following matters –

(a) the financial resources available to that person, including, but not limited to –

(i) salary, fees and other remuneration;

(ii) social security benefits;

…

(b) the costs in respect of the accommodation, including, but not limited to –

(i) payments of, or by way of, rent;

…

(d) that person’s other reasonable living expenses.”

Paragraph 17.40 of the Secretary of State’s Code of Guidance states:

“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. … Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials…”

Facts

In Samuels v Birmingham City Council [2015] EWCA Civ 1051 the appellant was an assured shorthold tenant of a property in Dagger Lane, Birmingham, which she occupied with her two children and her niece and nephew. There was a weekly shortfall of £34 between the amount of housing benefit she received and her contractual rent. She fell into rent arrears, and was given notice by her landlord in July 2011.

She subsequently applied to the authority as homeless. She said she could not afford the rent due to the housing benefit shortfall and gave income and expenditure figures which disclosed a monthly income comprised of tax credits - £819, income support - £290.33 and child benefit - £240. Her monthly expenditure included food/household items - £150, electricity - £40, gas - £50, travel costs & maintenance - £60, and telephone - £20. She confirmed, on various occasions, that these figures were correct. The authority concluded that she was intentionally homeless. The accommodation had been affordable as she had an excess of income over expenditure and so could and should have paid the part of the rent not met by housing benefit.

On review, the appellant’s solicitors argued that the expenditure figures submitted by the appellant were incorrect. They submitted revised figures, stating that the appellant could not remember precise details, but they were “confident that the new figures are reasonably accurate”. The revised figures were higher and included new items. In particular, expenditure on food/household items was increased from £150 to £750 per month.

The reviewing officer concluded that the property at Dagger Lane had been affordable. The figure of £750 pm for food/household items was excessive for “a family of your size” given that it did not include utilities or travel expenses; it was a matter of normal household budgeting that the appellant would manage her finances so as to ensure that she could meet her rent. He did not accept that there was not sufficient flexibility in her overall household income of in excess of £311 per week to meet a weekly shortfall in rent of £34. The appellant had confirmed that she was able to pay her bills on time and manage her finances. There was therefore no reason to assume that she would have been unable to manage a household budget in such a way as to leave sufficient excess income to pay her rent shortfall. The accommodation had also been “of suitable size for your household”.

The appellant appealed to the County Court. The afternoon before the hearing, her representatives informed the authority by email that they intended to raise a new point, that the authority had proceeded on the, incorrect, basis that the appellant’s household at Dagger Lane had only included two children when it had in fact included four; the authority had failed to make enquiries about this, the need for which was obvious given the consequences for expenditure. The email was forwarded to the reviewing officer who replied by email that he had been referring to a household of four children. The Judge allowed the appellant to argue the point, but admitted the email from the reviewing officer. He dismissed the appeal.

Appeal

The appellant appealed to the Court of Appeal, contending as follows.

(i) The authority had failed to have regard to the “starting-point” for assessing affordability (derived from comments of the Court of Appeal in Burnip v Birmingham CC [2012] EWCA Civ 629, and Lord Carnwath JSC in R (SG) v SSWP [2015] UKSC 15) that all welfare benefits other than housing benefit should be left out of account, as they were set at subsistence levels and so were not intended to be used for rent; child tax credits and child benefit were, additionally, intended for the support of children not rent.

(ii) The authority had also failed to have regard to Code, para.17.40.

(iii) The judge should not have admitted the reviewing officer’s email, given R v Westminster CC ex p Ermakov (1995) 28 HLR 819, CA.

(iv) The decision was inadequately reasoned.

The Court of Appeal dismissed the appeal.

Relevance of other benefits

The “starting-point” asserted by the appellant was incorrect. The 1996 Order and the Guidance make clear that in determining affordability, all forms of income and of relevant expenses should be considered. This suggested that a judgment had to be made on the basis of income and relevant expenses as a whole, and not that benefits income is to have any special status or treatment.

Burnip was of little assistance. It was addressed to the different question whether the availability of the other benefits could justify the discriminatory effect of statutory criteria relating to housing benefit; and the reasoning depended in part on the fact that one of the benefits in that case was specifically disregarded in the rules relating to the calculation of housing benefit. The judge’s statement that it would be wrong in principle to regard subsistence benefits as notionally available to meet a housing benefit shortfall was specific to the particular context and could not be applied across to the very different context of the present case. It did not cast doubt on the proposition that in this context a decision-maker should take into account all forms of income and relevant expenses in making an affordability judgment.

Nor did Lord Carnwath’s observations in SG (that child tax credits were designed to meet the needs of children and attached to the child not the parent) assist. Even taking them at face value, it did not follow that such benefits could not go towards meeting the costs of housing the children concerned.

On the face of it, there was considerable force in the general point made on behalf of the authority, that although housing benefit is specifically related to the costs of accommodation, it does not follow that no other benefits are ever intended to be used for the purpose of assisting with housing costs; a point that gained force from the greater limits placed on housing benefit by the government’s welfare reform policies.

The Guidance

A decision must make clear that the relevant matters have been considered, but for that purpose it is not generally necessary to refer expressly to individual passages in the guidance (see Balog v Birmingham CC [2014] HLR 14, per Kitchin LJ at [48]). In the present case, there was no need for the review decision to refer expressly to para.17.40 on the issue of affordability. It was sufficient if the substantive consideration given to the issue showed that due regard had been had to the paragraph. The reviewing officer had made a judgment that the appellant could have afforded to pay the rent shortfall without being deprived of basic essentials. In making that judgment, he was doing just what the guidance said needed to be done. It was therefore clear that due regard was had to this aspect of the guidance.

Admission of the email

The Judge had been correct to hold that the email fell on the right side of the Ermakov dividing line. This was a simple case of clarification or elucidation of the reasons given in the review decision, not a case of fundamental alteration or contradiction of those reasons or the plugging of a gap in the reasons. If, immediately after receipt of the review decision, the appellant had sought clarification of the point and had received the answer given in the email, there could have been no legitimate complaint about this aspect of the reasoning. The complaint gained no force from the fact that the query was raised just before the hearing of the appeal and was answered promptly.

Reasons

The only information about the appellant’s expenditure consisted of the figures she and later her solicitor had provided. Moreover, the solicitors had stated that it was impossible for her to remember precise details. There was no attempt to explain or justify individual figures. In those circumstances, the decision-maker was entitled to approach the matter in the way he did, forming a broad judgment that the amended figure of £750 per month for food and household items was excessive, and that there was sufficient flexibility in the overall household income to pay the rent shortfall. Enough was said to enable the appellant to understand how and why the decision had been reached. It was not necessary to go into further detail.

Jonathan Manning and Emily Orme of Arden Chambers appeared for Birmingham City Council. Jonathan can be contacted on 020 7242 4244 or This email address is being protected from spambots. You need JavaScript enabled to view it., while Emily can be reached on 020 7242 4244 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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