With perfect timing – as the Houses of Parliament engage in their constitutional grudge match over tax credits – the Court of Appeal in Samuels v Birmingham City Council has considered the extent to which those and other social security benefits may be taken into account in determining whether accommodation is affordable and therefore “suitable” in the context of a finding of intentional homelessness. The outcome of the appeal is not surprising on the facts but in the world of rising private sector rents and welfare cuts it provides a timely reminder of the need to give careful and detailed consideration to rent levels and budgets when considering homeless applications from households who have lost accommodation due to rent arrears.

The facts

Ms Samuels was a tenant of private rented accommodation which she occupied with four children. Her rent was £700 a month towards which she received housing benefit of £548.51 a month, leaving a monthly shortfall of £151.49. Her monthly income was made up of tax credits (£819), income support (£290.33) and child benefit (£240), totalling £1349.33. An income/expenditure form completed by Ms Samuels gave a total monthly expenditure (including the HB shortfall) of £531.89 (which was subsequently increased to £1386.48).

Ms Samuels fell into arrears with her rent and was eventually evicted. She applied to Birmingham City Council for assistance as a homeless person. The council decided that she had become homeless intentionally as a result of her failure to pay her rent. The reviewing officer found that certain elements of her expenditure were excessive and that there was sufficient flexibility in her household budget for her to have covered the shortfall between her rent and housing benefit. An appeal to the county court was dismissed. Ms Samuels appealed to the Court of Appeal.

The law

A person who is in unintentionally homeless and in priority need must be provided with temporary accommodation (section 193 Housing Act 1996). A person becomes homeless intentionally if as a result of an act or omission they cease to occupy accommodation that was reasonable for them to continue to occupy. In determining whether it was reasonable for a person to continue to occupy accommodation a local authority must take into account whether the accommodation is affordable. In particular the local authority must take into account: (1) the financial resources available to the applicant; (2) the costs of the accommodation; and (3) the applicant’s other reasonable expenses.

The Suitability of Accommodation Order (1996) and Code of Guidance for Local Authorities (2006) state that when considering the financial resources available to the applicant local authorities must take into account all forms of income including tax credits and social security benefits. The Code of Guidance states that accommodation is likely to be unaffordable if after housing costs the applicant would be left with a residual income of less than the level of income support or jobseekers allowance that is applicable to the applicant based on his/her family size.

The Court of Appeal judgment

Ms Samuels argued that the “starting point” is that income support, tax credits, and child benefit are intended to provide a subsistence income and to cover the costs of having children, and should not be taken into account in determining whether housing costs are affordable.

The court did not accept that “starting point” and pointed out that the Suitability of Accommodation Order and Code of Guidance make clear that local authorities should take account of all forms of income, including social security benefits of all kinds.

The court roundly rejected the argument based on Burnip v Birmingham City Council that subsistence benefits should be left out of account in determining what money was available to go towards housing costs. Burnip was decided in the wholly different context of the discriminatory effects of the relevant benefit legislation, and was of no assistance in the context of the homelessness provisions of the Housing Act 1996. While housing benefit is specifically related to the costs of accommodation, the court found that it does not follow that no other benefits are intended to be used for the purpose of assisting with housing costs. The court pointed out that while benefits like child tax credit are designed to meet the needs of children, not parents, this does not mean that the children's needs cannot be met by using those benefits to contribute to the housing costs of providing accommodation for the children concerned.

On the facts of the case, the court found that Ms Samuels could – and should – have used the income from her non-housing-related benefits (tax credits, child benefit, income support) to top up her housing benefit. To have done so would not have left her with a residual income below the subsistence level of benefits for a household her size. Accordingly, her decision not to use her benefits in this way supported the council’s finding that she had made herself intentionally homeless.

What this means for local authorities

The facts of this case will sound familiar to local authority homelessness officers, and will become all the more so as private sector rents rise and social security spending comes under increasing pressure. In cases affected by the benefit cap or "bedroom tax" the issue will be particularly acute. However, this case gives clarity to local authorities and clearly supports the approach of taking a household's total income, deducting housing costs, and assessing whether what remains is more or less than the "applicable amount" for benefit purposes. If more, then on the face of it that might support a finding of intentional homelessness. If less, it is unlikely to do so. It remains to be seen whether the court would adopt such a blunt approach in a case involving disability-related benefits as opposed to child-related ones. Authorities would be well advised to take particular care when making decisions about the purpose to which such benefits could and should have been put.

How Bevan Brittan can help

Bevan Brittan's housing team regularly advises local authorities on their housing duties and functions. Our team has a wealth of experience advising and acting in homelessness reviews and appeals. We can also act as a 'critical friend', ensuring that homelessness strategies and policies comply with the relevant law and guidance, and can advise on making section 184 and review decisions as robust as possible.

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