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Reasonable costs and the AHAS guidance

The Royal Borough of Kingston upon Thames recently overturned a County Court decision on a statutory appeal pursuant to the Housing Act 1996, s. 204. Nick Grundy QC and Victoria Osler, who appeared for the council, analyse the ruling.

The case of Baptie v The Royal Borough of Kingston Upon Thames [2022] EWCA Civ 888 concerns the procedure that a Council must adopt when assessing whether a homeless applicant’s previous accommodation was affordable for them. If the one reason why the applicant has ceased to occupy that accommodation is rent arrears and the Council nonetheless finds that it was affordable for them, then the Council can find that it is satisfied that the applicant is intentionally homeless (as defined in the Act, s. 191). The effect of a finding that an applicant is intentionally homeless is that the Council does not owe them the full housing duty in the Act, s. 193. The case involved consideration of three recent appellant cases: Samuels v Birmingham CC [2019] UKSC 98; Patel v LB Hackney [2021] EWCA Civ 897 and Baptie v LB Waltham-Forest [2022] EWCA Civ 112.

The important statutory provision is the 1996 Homelessness (Suitability of Accommodation) Order, Art. 2 which has the effect that it is not reasonable for a person to continue to occupy accommodation that is not affordable by them after they have met their other reasonable living expenses. Art 2 does not further define a person’s ‘reasonable living expenses’; i.e. is that the amount required to meet only their basic essential needs at a subsistence level or is it the average costs of living expenses for a household with the characteristics of their household?

Art 2 and the 2006 Code of Guidance, para 17:40 were interpreted by the Supreme Court in Samuels as requiring a Council to have regard to all of an applicant’s income, including any benefits. The relevant passage from the 2006 Code stated as follows:
In considering an applicant’s residual income after meeting the costs of the accommodation the Secretary of State recommends that authorities should 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 jobseeker’s allowance that is applicable in respect of the applicant … A current tariff of applicable amounts in respect of such benefits should be available within the authority’s housing benefit section

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The 2018 Code of Guidance, para. 17:46 which replaced the 2006 Code, para 17:40 provides as follows:

Housing costs should not be regarded as affordable if the applicant would be left with a residual income that is insufficient to meet these essential needs. Housing authorities may be guided by Universal Credit standard allowances when assessing the income that an applicant will require to meet essential needs aside from housing costs, but should ensure that the wishes, needs and circumstances of the applicant and their household are taken into account. The wider context of the applicant’s particular circumstances should be considered when considering their household expenditure especially when these are higher than might be expected….

1st Appeal Decision in Baptie

HHJ Hellman allowed Ms Baptie’s appeal for two main reasons; i.e. that the Council had:

  1. Not assessed Ms Baptie’s claimed expenses against her benefit entitlement; and
  2. Relied on figures in guidance produced by the Association of Housing Advice Services (“AHAS”) which were stated to be the minimum required to meet essential needs. HHJ Hellman held that the appropriate measure was the reasonable, or average and not the minimum costs of essentials.

Issues in CA in Baptie

RBKT’s appeal to CA raised the following issues:

  1. Did the Council err in treating AHAS guidance as objective evidence of reasonable living expenses?
  2. Did the Council err by failing to assess Ms Baptie’s claimed expenses by reference to her benefit entitlement; whether that entitlement was considered before or after application of the benefit cap (to which Ms Baptie was subject).

Decision

The CA allowed RBKT’s appeal.

The Court held that:

1(a)   The AHAS guidance is objective evidence of what a person reasonably needs to meet their essential need [48];

1(b)   The AHAS guidance does not lack qualities of objectivity and reliability and is based on evidence of process [49] to [54];

2(a)   The Council had had regard to the maximum level of benefits to which Ms Baptie was entitled and had found that her reasonable expenses to meet her essential needs was lower than that entitlement [55] to [58]; and

2(b)   That the 2018 Code of Guidance does not require a Council to have regard to an applicant’s benefits before they are subject to the benefit cap [61] and [62].

Conclusions

  • An LHA can use the AHAS Guidance in an objective assessment of a person’s reasonable costs on their essential living need.
  • An LHA does not have to test a person’s claimed expenses against their UC entitlement (although that may be appropriate in some cases).
  • If reference is made to a person’s benefit entitlement and that person is subject to the benefit cap the relevant amount is their capped benefits.

Nick Grundy QC and Victoria Osler are barristers at Five Paper.

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