Tenants “homeless” if rent is unaffordable? – new caselaw

by Readers Question

9:16 AM, 17th June 2019
About A year ago

Tenants “homeless” if rent is unaffordable? – new caselaw

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Tenants “homeless” if rent is unaffordable? – new caselaw

The important case of Samuels v Birmingham City Council was decided by The Supreme Court on 12th June 2019. This case decided that a person who had been evicted for rent arrears, as the Housing Benefit did not cover the full rent (£151.49 pcm shortfall), was not to be considered as “intentionally homeless”.

This new case backs up the earlier case law of R v Hillingdon LBC ex p Tinn (1988), and R v Wandsworth LBC ex p Hawthorne (1994), which determined that a person can be considered to be “homeless” if the accommodation available to them is so unaffordable that it would cause them to “deprive themselves of the ordinary necessities of life, such as, food, clothing, heat, transport and so forth”.

The Samuels case does help to clarify that the welfare benefit levels are set at a “subsistence level and are not designed to give a level of income that allows flexibility to spend outside maintaining a very basic standard of living”, and that “income support is not intended to cover housing costs”.

These three cases, considered together, lend strong support to the contention that where there is a Housing Benefit shortfall (or Universal Credit Housing Element shortfall), such that the person can only pay their rent if they use money from their other “subsistence level” benefits, then that person could be considered to be “homeless” as it would not be reasonable for them to continue to occupy unaffordable accommodation.

Furthermore, when considering whether it is “reasonable” for a tenant to continue to occupy accommodation, once they have been served with a valid s21 Notice (or s8 Notice, or Notice to Quit), it could be argued that Councils should take into consideration:
• the financial cost (the added debts the tenant will incur from the cost of court proceedings being passed on to them),
• the physical and mental effects (stress, anxiety, illness, etc) on the tenant and their household members, and
• the damage to their credit history if they have a County Court Judgement (CCJ) registered against them.

In light of the “affordability” case law and other factors mentioned above, I believe that the Council should NOT advise tenants to continue to occupy the accommodation after the end date of the Notice period.

Robert


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Comments

Jonathan Clarke

0:28 AM, 18th June 2019
About A year ago

Reply to the comment left by Old Mrs Landlord at 17/06/2019 - 22:34
Yes I guess councils have different approaches Mine is a unitary authority as well . They pay a months rent in advance and a months deposit and DHP every month of say £100 if needed to top up LHA for 6 mth . So ongoing support rather than just a one off package . The deal is I offer a new 6 mth tenancy to a new tenant or existing tenant. If existing tenant they will also DHP the arrears often. Had 4K recently and they also write off overpayments . I never take tenants from their housing list as they only offer totally unsuitable ones. Its a sticking plaster remedy and if their financial support falters then i naturally have to say goodbye to them . So they kinda set them up to fail and are just delaying the process by artificially delaying the inevitable eviction to buy themselves time as they have run out of temp B&B`s locally and have to ship them out of town

Jonathan Clarke

0:41 AM, 18th June 2019
About A year ago

Reply to the comment left by Cathie Hawkins at 17/06/2019 - 21:56
My understanding is they have a duty to provide emergency temporary housing while they assess your application but if they decide then you are intentionally homeless then they don`t have to provide you with longer term housing eg a council house

ameliahartman

2:02 AM, 18th June 2019
About A year ago

Obfuscated Data

Old Mrs Landlord

12:00 PM, 18th June 2019
About A year ago

Reply to the comment left by Jonathan Clarke at 18/06/2019 - 00:28The constant churn of 6 month tenancies you describe is the inevitable result of that policy, so basically a waste of public funds.
We attend the Private Housing Forums run by the local authority and when the benefit cap and housing allowance freeze were introduced they told us that a fund was being set up to make additional discretionary housing payments to tenants who would be affected but that the moneys would already be spoken for to top up tenants in London who would be the most greatly impacted by the measures so we in the provinces would stand no chance.

Jonathan Clarke

15:36 PM, 18th June 2019
About A year ago

Reply to the comment left by Old Mrs Landlord at 18/06/2019 - 12:00I`m in Milton Keynes, Bucks so an hour north of London . I was `headhunted ` by London councils who yes seemed to have bottomless pockets and were offering me 3.5K advanced payments to use as we like as a bribe to take their LHA tenants who were being priced out . It was as you say a waste / misuse of public funds . They also now in addition have a homeless prevention fund as well and one rather eager operator offered me a grand over the phone in desperation no questions asked just so he could reach his own targets of relocating his client list . I did think this was an awful way to operate and let his managers know. He no longer works for them. The whole system from the outside looking in - appears to be in meltdown

Old Mrs Landlord

18:04 PM, 18th June 2019
About A year ago

Reply to the comment left by Jonathan Clarke at 18/06/2019 - 15:36
Madness, isn't it? Taking it away with one hand and giving it back with the other, all administered by a set of little jobsworth fiefdoms which do not communicate, let alone co-operate. The losers are the vulnerable, the low-paid, the taxpayers and, of course, the landlords. When I identify any winners I'll let you know.

Monty Bodkin

20:57 PM, 18th June 2019
About A year ago

Reply to the comment left by ameliahartman at 18/06/2019 - 02:02
"What are WE doing to protest about the proposed abolition of Section 21? We are all against it, it would ruin our businesses, so what are we doing to stop it?

I don't know about the WE/OUR BUSINESSES bit, but as someone who is genuinely a landlord, this what I'm doing;

*Lowering my LTV.
*Increasing rents. (If I go bust, it's not doing my tenants any favours)
*No new DSS tenants.
*Gradual phasing out of existing DSS.
*Boycotting B&Q who support Shelter ...and others who do.
*Selling up as appropriate.
*Building up reserves.
*Fixing some mortgages long term to balance my lending.
*Making sure all properties are individually stress tested to current lending requirements -and way beyond.
*Getting out of licensing areas (last one left in Nottingham!).
*Only taking on new tenants who I am 99% sure I'll never have to evict.
*Not converting or building any new homes, or ever likely to do so again.
*Spending my working capital on improving my own homes for once.
-And I'm really enjoying spending it, I've finally got Sky telly, just like my DSS Tenants!

ameliahartman

22:26 PM, 19th June 2019
About A year ago

Obfuscated Data

Monty Bodkin

7:52 AM, 20th June 2019
About A year ago

Reply to the comment left by ameliahartman at 19/06/2019 - 22:26
It's all about risk management.

I'll keep it simple and the figures rounded so non-landlords can understand;

*DSS tenants are twice as likely to be evicted.
*They are twice as likely to be in arrears.
*They are using the property 3 times as much as tenants out at work all day.
*They require twice as much management.

(There is a lot more to it than that but I'm keeping it simple.)

Now that extra risk and work costs.

In the past, DSS rates were set at the average for the area. So a landlord with a below average property could charge a premium for that extra risk and work, if so minded.

Then they changed it to the lowest 30th percentile. ie DSS rates only covered the rent for the worst third of rental properties in an area. Landlords could still make it work if they had properties in the lowest 10th percentile or they had the numbers and a big attitude to risk and were prepared to put the work in.

And then there's the good bit, they capped the DSS rates!
So what was the lowest 30th percentile was gradually eroded to the lowest 25th, 20th or even 10th percentile in some areas. It just ain't worth doing anymore for most landlords.

Not to mention needing an encyclopaedic knowledge of the benefits system and a huge bureaucracy pain threshold.

I genuinely have some DSS tenants 'cos they've been with me decades and I'm not completely heartless. But one more bit of daft legislation, landlord licensing scam etc could just tip the balance.

I'm certainly not taking any more DSS tenants on -It's business, not discrimination.

(N.B Keeping it simple and figures rounded so non-landlords can understand)

Monty Bodkin

8:26 AM, 20th June 2019
About A year ago

Reply to the comment left by ameliahartman at 19/06/2019 - 22:26To answer your points.
Stopping the removal of section 21.
I believe they will only react to the consequences of their actions, "No DSS" is one of those consequences. I'm also optimistic the tide is turning against all the landlord bashing. They are currently holding an ineffectual but well meaning government inquiry into "No DSS" (why they don't simply ask genuine DSS landlords like Mick Roberts or Jonathan Clarke beats me).
Working tenants can be made redundant or be sacked.
They can, but they'll have redundancy pay and or reserve funds/assets (I check) and they are statistically far more likely to gain new employment than someone long term unemployed. Plus I check what quality of employment they have. e.g An experienced nurse is a lot lower risk and more likely to get a new job than a blog writer for a housing 'charity'.
Your working tenant might sublet the property
They might, but they are less likely to than a DSS tenant.
If Section 21 is scrapped, how will you deal with subletters?
As said previously -"Only taking on new tenants who I am 99% sure I'll never have to evict." If they do scrap it I'll go to 99.99% sure I'll never have to evict and I'm already increasing rents and building reserves to cope with the extra void times that would entail.
ANY tenancy is a risk
Of course it is (no need to shout!).
It is all about mitigating that risk.

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