Affordability and benefit income in homelessness decisions — a decision from the Supreme Court
A case law update on Samuels v Birmingham City Council (2019) — a decision on intentional homelessness
Extent: England & Wales
What the case was about
The case of Samuels v Birmingham City Council (2019) UKSC 28 is an important decision on the question of affordability, which is relevant to three questions that commonly arise in homelessness queries:
- Whether a person’s home is reasonable for them to occupy (which will be a determining factor in whether or not they should be considered homeless).
- Intentionality (the question of whether they became homeless as a result of their own deliberate act or omission — and whether the property they became homeless from would have been reasonable for them to continue to occupy).
- Suitability (whether any accommodation which the council helps to secure under the prevention or relief duties, or offers in discharge of a homelessness duty is suitable for the applicant and members of their household).
Ms Samuels was the assured shorthold tenant of a privately rented property which she occupied with four children. She fell into rent arrears and was evicted. On presenting to Birmingham City Council as homeless, they decided that the property had been affordable and reasonable for her to continue to occupy, and that she was therefore intentionally homeless.
Ms Samuels was entirely dependant on means tested social security benefits, comprising housing benefit, income support, child benefit and child tax credit. Her rent exceeded her housing benefit by around £150/month, and when expenditure details were provided the financial statement showed an overall shortfall of £37/month. The council’s reviewing officer asserted that the household expenditure figures were ‘excessive’ and that there should be ‘sufficient flexibility’ in the overall household budget to meet the rent shortfall.
The Homelessness (Suitability of Accommodation) Order 1996 (SI 1996/3204) requires Local Authorities to take account of all financial resources available to an applicant, including but not limited to salary and benefit income, and of expenditure including but not limited to rent and ‘other reasonable living expenses’.
The Homelessness Code of Guidance for Local Authorities 2006 was in force at the time of Ms Samuels’ presentation, which stated at paragraph 17.40 that:
“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.”
An appeal in the County Court did not succeed, with the judge dismissing an argument that the Code had been disregarded on the basis that it was mentioned in the decision letter, and that the Code represented only ‘a recommendation’ to which it was reasonable to assume some consideration had been given. The Court of Appeal also dismissed an appeal, holding that review officers are not obliged to identify each paragraph of the Code which has been considered. The Court of Appeal also did not accept that where an applicant is reliant entirely on benefits, these are set at a subsistence level which allows no flexibility beyond maintaining a very basic standard of living.
Submissions to the Supreme Court set out a background of rising levels of homelessness due to the ending of private tenancies, following welfare reforms which had led to shortfalls between rent and housing benefit becoming commonplace. It was argued that the wrong test had been applied in considering whether the applicant could manage their household budget differently to meet a shortfall in rent — the correct test should be to assess whether total household income exceeded total reasonable household expenditure.
On the question of ‘reasonable’ expenditure it was argued that paragraph 17.40 of the Code had not been correctly interpreted or considered. The wording of the Code had originally been formulated when it was first issued in 1999. At that time, income based job-seekers allowance and income support awards had included family premiums and dependant child additions in their applicable amount. These had been replaced from 2004 with Child Tax Credit. It was argued that the replacement benefits were designed to be equivalent, and that it could not therefore be appropriate to treat them differently from an award of income support with the old style premiums, which would have deemed the accommodation unaffordable in terms of the guidance at 17.40. It was asserted more generally that means tested benefits cannot be intended to meet more than basic living expenses, and that treating benefits paid in respect of children less favourably than benefits paid in respect of adults was at odds with the s.11 Children Act 2004 (CA 2004) duty to safeguard and promote the welfare of children.
What the court decided
The Supreme Court held that assessing affordability should not be an exercise of the council officer making their own assessments of how an applicant might manage their household budget differently. The correct assessment to make is whether the household expenses are reasonable. This will require consideration of the individual circumstances of an applicant, but the court was clear that subsistence benefit levels indicate an objective starting point for assessing reasonable living expenses, and accepted the s.11 CA 2004 point; “benefit levels are not generally designed to provide a surplus above subsistence needs for the family. If comparison with the relevant benefit levels is material to the assessment of the applicant, it is difficult to see why it should be any less material in assessing what is reasonable by way of living expenses in relation to other members of the household.”
What this means for advisers
This is a significant precedent in terms of establishing how affordability should be assessed in relation to the level of subsistence benefits. While the case in question related to an intentional homelessness decision, it should be noted that suitability in terms of affordability will also be relevant to the question of whether or not a property is reasonable to continue to occupy under the prevention and relief duties, which arise without any consideration of intentionality. The implication for any tenant meeting a housing benefit/housing costs shortfall from subsistence benefits is that arguably, their accommodation is not reasonable to continue to occupy.
A new Homelessness Code of Guidance (February 2018) is now in force, updated to take account of the Homelessness Reduction Act 2017 , and the current version offers slightly different guidance on assessing affordability, with the “recommendation” in the previous version toned down to “may be guided by”. The Code now states at paragraph 17.46 “ 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 specific to their circumstances. 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 Supreme Court noted this update, and that it is far from definitive — calling for the Government to issue clearer guidance in light of it’s judgment.
As with any homelessness case, advisers are encouraged to scrutinise negative decisions (obtaining a copy of the decision letter is likely to be essential to this), and to ensure that opportunities to challenge these by internal review are exercised within the 21 day time limit from the date on which the decision was issued. Assistance can be offered via the Expert Advice Team consultancy service if required.
Amy Hughes is a member of the Housing Expert Advice Team at Citizens Advice.
