Upper Tribunal (Administrative Appeals Chamber)

 

 

IN THE UPPER TRIBUNAL Case No.  CH/1988/2012

ADMINISTRATIVE APPEALS CHAMBER

 

Before Judge Mark

 

Interim Decision:

1. The appeal is allowed. 

2. I set aside the decision of the tribunal.

3. The Respondent Council is to indicate within four weeks of receipt of this decision whether it still contends that the rent payable for the claimant’s dwelling was unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere and if it does so contend it is to include with its contentions any additional evidence and submissions it wishes to rely on and is to indicate at the same time whether it seeks any further oral hearing and if so the reasons for it.

4. The claimant is to file any further evidence and submissions within four weeks of receipt of the Respondent Council’s evidence and submissions and is to indicate at the same time whether she seeks any further oral hearing and if so the reasons for it.

5. If the Secretary of State wishes to make any further contribution to these proceedings he should so indicate within four weeks of receipt of this decision when directions can be given as to such contribution.

 

 

REASONS FOR DECISION

 

1.     This appeal is brought with the permission of a Judge of the Upper Tribunal from a decision of the First-tier Tribunal given on 20 October 2011 dismissing the appeal of the claimant from a decision of Birmingham City Council as to his claim for housing benefit in relation to refuge accommodation provided to her by a registered charity.

 

2.     I held an oral hearing of the appeal at which the claimants were represented by Mr. Jan Luba QC and Mr. Desmond Routledge, the council was represented by Mr. Jonathan Manning and the Secretary of State by Mr. Stephen Cooper.  I am grateful to all of them for their considerable assistance and I note that the representations of the Secretary of State were directed only to whether the use of rents charged by refuges provided by registered social landlords as comparators for those provided by registered charities and others and whether the First-tier Tribunal erroneously placed the burden of identifying the extent of any subsidy on the claimant.

 

3.     The issues involve the construction and application of the version of regulation 13(b) of the Housing Benefit Regulations 2006 incorporated by the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006 (the Consequential Provisions Regulations) in relation to exempt accommodation and certain other cases as identified in Schedule 3 to the Consequential Provisions Regulations.

 

4.     Before the First-tier Tribunal this appeal was heard together with a similar appeal by a number of other ladies who obtained similar accommodation from the same charity.  The issue in respect of all the claimants was substantially the same.  The council had sought to limit the rent in respect of which housing benefit was payable on the basis that the accommodation was exempt accommodation under paragraph 4(10) of Schedule 3 to the Consequential Provisions Regulations and that the rent payable for the accommodation, or in the case of several claimants the rent increase imposed in July 2010, was unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere.  The judge considered the issues and ruled against all the claimants on identical grounds.  Appeals have been brought in the names of this claimant and one other claimant although the appeals appear to have been conducted throughout by representatives of the landlord charity, and are essentially for the benefit of the charity, the continued functioning of which is said to have been put in doubt by the ruling.

 

5.     The landlord charity, Roshni, operates a women’s refuge for women from the South Asian continent who are experiencing domestic violence or parental conflict.  According to an internet print out at pp.74-76 of the file, it has nine single fully furnished rooms and can also accommodate up to 7 children.  Accommodation is provided for a minimum of one night and a maximum of nine months, with an average stay of 6 months.  It had seven full time staff and provided support services.  There was no waiting list and vacancies were infrequent.

 

6.     There was no problem, so far as housing benefit was concerned, with the rents being charged by the charity until after it had conducted a review of its accommodation and housing services charges after losing a significant amount of outside funding for the year 2010/11.  According to submissions at p.113 of the file, the amount of funding being lost in that year was about £120,000.  Their accounts for the year ending 31 March 2010, which were in evidence, show the amount of unrestricted public funding from Supporting People as being £118330, that amount being already more than £30,000 less than the funding in the previous accounting year.  By contrast the amount received in respect of accommodation charges was only £64,054.  Total income from restricted and unrestricted sources for the year ending 31 March 2010, including donations, was £236,825, while outgoings were £262,213, so that in that year the charity operated at a loss of over £25,000 (p.122).  As at 31 March 2010, the charity had net assets of £128,964, some of which was funding the use of which was restricted. 

 

7.     The impact on the budget for 2010/11 of the loss of public funding from Supporting People is obvious.  There was a review which led to a report dated 3 June 2010 which was commissioned by Roshni and was produced by a local consultancy in housing and support.  Roshni’s instructions to the consultancy were to carry out a zero based resource accounting exercise to determine the actual costs of providing accommodation and housing services to Roshni’s tenants in Birmingham and the rent required to cover those costs.  The results are stated to reflect the actual expenditure and reasonable allowances required to operate the accommodation based service to the vulnerable individuals that Roshni accommodates and supports (file, pp.29-30).  The rent schedule produced identifies the number of tenants as 9, and gives the date of commencement of the proposed new rent as 5 July 2010.  The total contractual rent was found to amount to £257.87 per week and to consist of a core rent of £132.80, service charges of £109.37 and ineligible charges (for which there was no entitlement to housing benefit) of £15.70.  The total sum in respect of which housing benefit could be claimed (the eligible rent) was therefore £242.17.

 

8.     The claimant became a licensee of Roshni shortly after this new rent came into operation and claimed housing benefit in respect of it.  Her only child was well below school age, but in the other appeal with which I am dealing the claimant had with her two children of school age.  In both cases the inclusion of children brought into operation regulation 13(4) if the council did conclude that the rent payable was unreasonably high.

 

9.     In this case as in most cases, the tenants sought to claim housing benefit and, this being a time of considerable financial stringency for the council as for many others, the council sought to limit the amounts for which it was liable.  It did so by reference to the provisions of Schedule 3 to the Consequential Provisions Regulations, which gave it power to restrict “unreasonable payments”.  Paragraph 4(1) of Schedule 3 provides that, subject to certain provisions in that paragraph, the eligible rent of certain persons for housing benefit purposes was to be determined in accordance with versions of regulations 12 and 13 of the Housing Benefit Regulations 2006 set out in paragraph 5 of Schedule 3.  The persons in question include a person who “is liable to make payments in respect of a dwelling occupied by him as his home, which is exempt accommodation”. 

 

10. “Exempt accommodation” is defined in paragraph 4(10) as including accommodation “provided by a non-metropolitan county council in England within the meaning of section 1 of the Local Government Act 1972, a housing association, a registered charity or voluntary organisation where that body or a person acting on its behalf also provides the claimant with care, support or supervision.”  It is common ground that the charity did provide exempt accommodation to the claimant.

 

11. So far as material, regulation 13 of the Housing Benefit Regulations 2006, as provided for in those circumstances by paragraph 5 of Schedule 3, reads as follows, so far as material:

 

“13. Restrictions on unreasonable payments

…….

 

(3) The relevant authority shall consider –

(a) whether by reference to a determination or re-determination made by a rent officer in exercise of a function conferred on his by an order under section 122 of the Housing Act 1996 or otherwise, whether a claimant occupies a dwelling larger than is reasonably required by him and others who also occupy that dwelling (including any non-dependants of his and any person paying rent to him) having regard in particular to suitable alternative accommodation occupied by a household of the same size; or

 (b) whether by reference to a determination or re-determination made by a rent officer in exercise of a function conferred on him by an order under section 122 of the Housing Act 1996 or otherwise, whether the rent payable for his dwelling is unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere,

 

and, where it appears to the authority that the dwelling is larger than is reasonably required or that the rent is unreasonably high, the authority shall, subject to paragraphs (4) to (7), treat the claimant’s eligible rent, as reduced by such amount as it considers appropriate having regard in particular to the cost of suitable alternative accommodation elsewhere and the claimant’s maximum housing benefit shall be calculated by reference to the eligible rent as so reduced.

 

(4) If any person to whom paragraph (10) applies –

…………

 

(d) is a member of the same household as a child or young person for whom he or his partner is responsible,

 

no deduction shall be made under paragraph (3) unless suitable cheaper alternative accommodation is available and the authority considers that, taking into account the relevant factors, it is reasonable to expect the claimant to move from his present accommodation.

………….

 

(9) For the purpose of this regulation –

(a) in deciding what is suitable alternative accommodation, the relevant authority shall take account of the nature of the alternative accommodation and the facilities provided having regard to the age and state of health of all the persons to whom paragraph (10) applies and, in particular, where a claimant’s present dwelling is occupied with security of tenure, accommodation shall not be treated as suitable unless that accommodation will be occupied on terms which will afford security of tenure reasonably equivalent to that presently enjoyed by the claimant; and

(b) the relevant factors in paragraph (4) are the effects of a move to alternative accommodation on –

(i) the claimant’s prospects of retaining his employment; and

(ii) the education of any child or young person referred to in paragraph (4)(d) if such a move was to result in a change of school.

 

(10) This paragraph applies to the following persons –

(a) the claimant;

(b) any member of his family;

…….”

 

12.  The Council decided that the eligible rent was unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation and reduced it, after revising its initial assessment, to £179.20 per week.  It assessed the entitlement of both claimants and of Roshni’s other licensees on this basis.  It relied on five comparators in Birmingham, all of whom were in receipt of public funding.  All provided accommodation for women with or without children who were escaping domestic violence.  The spectrum of eligible rents for these 5 bodies ranged from £140.75 to £210.16 in total.  This made the new Roshni rent 72.06% more expensive than the cheapest of the comparators, 15.25% more expensive than the most expensive of them and 33.705% more expensive than the most expensive of them.  The council therefore determined that the eligible rent should be £171.01 (later revised to £179.20, which equated to the eligible rent charged by the middle of the five comparators).

 

13. The original decision notice to the claimant is dated 28 July 2010 and describes the eligible rent as £171.01, with ineligible service charges of £86.86, indicating apparently that the reduction was entirely applied in relation to the service charge element.  The revision by letter of 24 August 2010 simply stated that the original to restrict eligible rent to that amount was inappropriate and that it should be restricted to £179.20, which was in keeping with suitable alternative accommodation provided by similar hostels.

 

The comparators

14. Evidence of the charges made by the comparators was provided.  This showed that at least three of the comparators were registered charities.  It was common ground before me that a fourth comparator was, a fact that could easily have been ascertained by either party from the Charity Commission’s website.  I note in this context that the claimant has been represented throughout, as had all the appellants to the tribunal, by representatives and, before me, by counsel instructed by Roshni whose financial interests were in reality more damaged by the council’s decision that those of any of the appellants.

 

15. The figures in evidence before the tribunal were as follows, numbering the comparators in order of total eligible rents from 1 to 5:

 

Comparator Core Rent Service Charges Total Eligible Rent

1. £60.42 £80.33 £140.75

2. £72.24 £99.96 £172.20

3. £88.75 £90.45 £179.20

4. £62.06 £141.24 £203.30

5. £101.87 £108.29 £210.16

Roshni £132.80 £109.37 £242.17

 

16. It can be seen from the above figures that while Roshni’s core rent was higher than the comparators, its service charges were comfortably in the middle of the comparator spectrum.  I also note, however, that the division between core rent and service charges is not uniform between Roshni and the various comparators.  There is only a very limited breakdown of the charges in the case of most comparators, but building insurance and a sinking fund are included in Roshni’s core rent figure, at least comparator 1 has included them in the service charge figure.  Subject to any such minor adjustment, however, a combination of the core rent for comparator 5 and the service charges for comparator 4, both of which had been treated as reasonable, came to slightly more than Roshni’s total eligible rent.

 

17. Roshni contended before the tribunal that it was unfair to it to use as comparables publicly funded bodies and, relied on the decision of Collins J in R v Coventry CC ex p. Morgan and others unreported, QBD, 7 July 1995, that the only comparables that should be used were other private providers of similar services who did not rely on public funding.  It could identify no such private providers in Birmingham but provided details of similar hostels in Coventry and Leicester which charged up to £323 per week for similar accommodation and services.  It was also contended that even if the eligible rent was found to be too high, the rent should only be reduced to the maximum figure which would have been accepted as not unreasonably high, particularly bearing in mind that subsequent licensees could be charged that amount without the council having power to reduce it.  The figure identified for this purpose was £210.16, the amount charged by comparator 5.

 

The hearing before the First-tier Tribunal

18. Both the claimant and the council were represented at the hearing on 19 October 2011, although not by counsel.  It appears from the record of the proceedings that in the course of the hearing the council conceded that it was wrong over services charges and that the representative of Roshni was right.  I was informed by Mr. Manning for the council that this concession related to a calculated split between core rents and service charges.  The contentions of Roshni’s representative appear at p.174 of the file.  These were that the council was wrong in failing to consider the service charges levied by the comparators (if it was right to use those comparators at all) and that the gross eligible service charges levelled by Roshni were not unreasonable when compared with those levied by four of the comparators (the figures are those set out above excluding charity 1).  The point is recorded as agreed in the record of the proceedings.

 

The decision of the First-tier Tribunal

19. On 20 October the tribunal judge issued her decision that the appeal, and the parallel appeals, failed.  In her subsequent statement of reasons dated 22 February 2012, she correctly stated that the burden of establishing that the rent charged was unreasonably high fell on the council.  After setting out relevant provisions of regulation 13, the statement very briefly describes the refuge and the facilities and staff and notes that there is no security of tenure beyond the tenure provided for in the temporary licence agreements.  Lack of security of tenure was thus shared with the comparators used by the council.

 

20. The judge distinguished R v Coventry ex p.Morgan on the ground that that case related to exempt tenants while the present cases related to exempt accommodation and determined that the rent charged by registered social landlords should not be excluded when looking at hostel accommodation.  She continued in paragraphs 9 and 10 of the statement:

 

“9………The point so far is that it applied [sic] to exempt tenants was to ensure that they were not restricted to council housing only, as was likely to be the case, if it was allowed to form the comparator when considering the cost of alternative housing.  Mr Key [the claimant’s representative] was not able to quantify this suggested ‘unequal additional funding’ which would render using accommodation provided by registered social landlords (RSLs) unfair.  In any event, I observe that as a registered charity, Roshni itself receives significant advantages in terms of taxation, and, for all I know, charitable donations which RSLs do not.  Mr. Key had not been able to identify the extent of any subsidy enjoyed by any of the registered social landlord providers.  However, I accept that for some of them there undoubtedly would have been some form of public funded subsidy, but I did not accept that the rent at which they were able to offer accommodation was an unrealistically low rent.  Accordingly I did not accept that the rent charged by a private charity should not be compared with the cost of accommodation which enjoyed some level of subsidy.

10. In the event, looking at the range of rents in alternative accommodation, I was satisfied that the rent payable for the Roshni accommodation was unreasonably high by reference to the rent in respect of the alternative accommodation identified by the Local Authority, which I accepted was suitable alternative accommodation.  I was satisfied that at the level to which the authority had restricted the rent, £179.20 per week, there was a range of accommodation which was available.  I did not consider the alternative accommodations indentified by Mr Key as suitable.  This was primarily by reason of the distance of the alternatives, which otherwise would have fallen to be taken account of as comparators.  The nearest was in Coventry which is 20 miles from the centre of Birmingham, and Leicester, which is over 40 miles.”

 

21. For the reasons given below, while my reasoning is rather different from that of the judge, I agree that the comparators relied on by the council can properly be considered by the council and that the hostels in Coventry and Leicester have not been shown to be suitable comparators.  However, it appears to me that in other respects the judge’s reasoning is faulty and inadequate for the following reasons:

 

(1)  The judge proceeded on the basis that the comparators were not charities and therefore did not have the same tax advantages and opportunities for donations that Roshni would have.  On the evidence before her, this was incorrect in respect of three of the five comparators, all of whom are described on their own documents in the hearing bundle as a registered charity with the registration number provided.  A simple enquiry should have revealed that a fourth comparator was also a registered charity.

(2)  The judge stated that for all she knew Roshni benefited from charitable donations.  Roshni’s accounts for the year ending 31 March 2010 were in the tribunal bundle and showed that it received £217 in donations in the year to 31 March 2009 and £178 in the year to 31 March 2010.  There appears to have been no enquiry from the judge and there is no suggestion anywhere that its donations in the year to 31 March 2011 were expected to be significantly different.  Further, the claimant’s submissions, which were clearly based on information provided by Roshni, were that Roshni made operating losses in the two previous years (as shown by the accounts) and, as she clearly accepted, would be losing about £120,000 “due to reduction and loss of Grant (Supporting People) from the Local Authorities in which Roshni operate.  These losses are due to reduction in Grant funding from central Government.  This obviously exacerbates the financial operating position and places the Charity in significant danger of insolvency.”  There is nothing in this to suggest that any significant increase in donations was expected or that there was any other source of funds.  Had the judge wished to explore this, she could have sought a copy of the accounts or at least draft accounts for the year ending 31 March 2011.

(3)  As all are charities, it is plain that Roshni enjoyed no tax benefits which were not enjoyed by the comparators, and from its accounts it is difficult to identify any tax benefit enjoyed in practice.

(4)  It is apparent from Roshni’s accounts that about half its income in the year to 31 March 2010 was from Supporting People and that it could only operate at the previous rental levels because of this subsidy.

(5)  The statement that the claimant’s representative did not provide any evidence of the extent of any subsidy enjoyed by any of the comparators places the burden of producing that evidence on the wrong shoulders.  If the burden of establishing unreasonableness lies with the council, as the judge correctly concluded, and if the level of subsidy is a relevant consideration, as she rightly appears to have considered it to be, then it is for the council to produce the relevant accounts which show that level for the comparators it is seeking to rely on, at least insofar as they are readily obtainable.  They may be available from the council’s own records where, as here, the distribution of the subsidy is in the hands of the council, but in any event they are public documents readily obtainable from the Charity Commission website.  In the absence of any such documents, either they should have been sought or, in the absence of any other evidence, the judge might have proceeded on the basis that the level of subsidy of the comparators was comparable with that which Roshni had previously enjoyed.

(6)  Bearing in mind the agreed concession that the level of service charges was reasonable, and that it was within the spectrum of the comparators’ figures, it appears to me that the tribunal ought then to have considered the reasons why the core rent figure was higher than those of the comparators and if it concluded that this was because of the level of subsidy received by the comparators there must at least be a question mark to be dealt with as to why the higher rent that needed to be charged was unreasonably high by comparison with the comparators. 

 

22. For these reasons, I conclude that the decision was in error of law and I set it aside.  On this basis it was agreed at the oral hearing that I should substitute my own decision after considering the relevant accounts on the Charity Commission website and giving the parties an opportunity to submit further evidence and submissions should that be needed.

 

The proper interpretation of Regulation 13

23. Before considering the evidence, I first consider the proper interpretation of Regulation 13, which in the form in which it appears in the Consequential Provisions Regulations essentially reproduces regulation 11 of the Housing Benefit Regulations 1987 as it existed prior to 1996.  In R v Coventry City Council ex p. Morgan and others (sometimes referred to as ex parte Waite, Mr. Waite being one of the others), Collins J considered this regulation in relation to a number of residential tenants in the private sector whose rents Coventry Council had compared with council rents in the same area and on that basis had found, for the purposes of regulation 11(2)(c) of the 1987 Regulations that the rent payable for their dwellings was “unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere”.

 

24. The question before Collins J, as described by him in his judgment, of which I have been provided with a transcript, was whether the council “is limited to private sector rented accommodation or can take into account local authority or housing association accommodation.  That is important” he continued “because, of course, there is a subsidy element involved in the amounts which are payable in respect of those sorts of tenancies.” He pointed out that, as counsel for the tenants had submitted, if it was appropriate to have regard to the levels of public sector rent, then there is a potential unfairness to the private sector tenants because the usual result of taking account of what I call public sector tenancies is to produce a lower figure than is appropriate for private sector lettings.”  He concluded that counsel for the tenants was right when he said that “the purpose of this is to compare like with like, and to answer the question whether this landlord was charging an unreasonable rent for this tenant.  That is what has to be considered.  It seems to me that that is also consistent with the reference to the determination by a rent officer.

 

25. He drew attention, in this respect, to the wording of regulation 11(2)(c) which required the authority to consider “whether by reference to a determination or re-determination made by a rent officer in exercise of a function conferred on him by an order under section 21 of the Housing Act 1988 or otherwise that the rent payable for his dwelling is unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere”.  He pointed out that that “suggests that the determination by the rent officer may well play a very large part.  Indeed, it may sometimes be the only relevant factor which the Board will take account of”.

 

26. Collins J concluded that the existence of available council accommodation could have an influence on the level if in a particular area it had the effect of depressing the market prices for private sector accommodation, and to that extent it could affect the position.  But the rent for council accommodation could not be taken specifically into account as a separate matter.

 

27. The current regulation 13(3) also refers to determinations by the rent officer or otherwise in the same way as the old regulation 11.  In my judgment it is not possible to distinguish R v Coventry from the present case in the way that the judge in this case sought to do by saying that that case referred to exempt tenants whereas this case referred to exempt accommodation.  That is to ignore the fact that both depend upon the wording of the same sub-section and that sub-section makes no such distinction between them.

 

28. In my judgment R v Coventry is authority for the proposition that one must, so far as practicable, compare like with like, and where there is relevant alternative private accommodation, it is the rent for that accommodation which must normally be the principal point of reference in considering the rent charged by a private landlord.

 

29. Collins J was not, however, considering the position where there is no relevant unsubsidised accommodation with which a comparison can be made.  Further, his comments about subsidy appear to me to be equally appropriate where the subsidy is a private charitable one just as where it is a public subsidy.  An unsubsidised private landlord and his tenant are not to be penalised just because there happens to be a charity with a large endowment offering sub-market rents to a limited number of tenants.

 

30. On the other hand, it does not appear to me that “suitable alternative accommodation” can never include subsidised accommodation.  That would have two results that would at the least be highly unfortunate.  Firstly, it would mean that in such a case there would be no statutory control over the rent which a private landlord might charge because there would be nothing relevant for the purpose of regulation 13(3)(b) compared to which the rent in question would be unreasonably high. 

 

31. Secondly, if all the private suitable alternative accommodation was fully occupied, and the council determined that the rent being charged was unreasonably high in comparison with that private accommodation, then where, for example, the tenant is, as here, a member of the same household as a child or young person, regulation 13(4) provides that the council may only make a deduction if cheaper suitable alternative accommodation is available.  Mr. Luba accepted that “suitable alternative accommodation” must have the same meaning in regulation 13(3) and 13(4).  Yet his contentions as to the effect of R v Coventry would mean that even if the rent in issue was unreasonably high in comparison with the rent payable for other private accommodation, but only subsidised accommodation was available at the relevant time – in the present case in the form of an equally satisfactory refuge which had not lost its public funding - this could not be taken into account in determining whether cheaper alternative accommodation was available. 

 

32. I can see no reason why “suitable alternative accommodation” cannot include both subsidised and unsubsidised accommodation.  No distinction is drawn in the use of the words to prevent the words from having their normal meaning.  The effect of the decision in R v Coventry is that comparison must be like with like so far as reasonably possible, which means that in the normal case, involving private unsubsidised lettings, comparison should be within the unsubsidised private sector. 

 

33. Where such a comparison is not possible because of the absence of such comparators, it is permissible and necessary to look at the rent charged by subsidised landlords.  However, for an unsubsidised rent to be unreasonably high in comparison with that charged by the subsidised landlords, it would normally have to be shown that the size of the rent exceeded what the other rent could be expected to have been but for any element of discount.  I do not totally rule out any other possibility, for example where a subsidy has been lost because of some wrongdoing by the landlord, particularly where there is no shortage of suitable subsidised accommodation.  However, the present case concerns refuges for women against whom violence has been perpetrated.  The number of places needed in hostels for such women and their children may well exceed the number of places for which public funding is available, particularly at a time such as the present when public funding is being substantially reduced across the board.  Many if not most of those availing themselves of such accommodation would need to obtain housing benefit to pay the rent.  Without housing benefit, and without being subsidised by public or private funding, a charity could not operate a hostel that was needed to cater for those who could not get into a funded hostel because it could not recoup its reasonable operating costs.  This would leave victims of violence either homeless or at risk at the homes they wished to leave.

 

Are the Coventry and Leicester hostels suitable comparators in this case?

34. I agree with the judge that they are not suitable comparators.  The question is whether they offer suitable alternative accommodation for each of the particular claimants.  In view of their distance, 20 and 40 miles from Birmingham respectively, evidence would be needed that they were suitable for each of the claimants for them to be relied on in any particular case.  There is no such evidence.  In any event, it appears to me that comparing like for like means comparing, so far as possible, accommodation in the same area, and not at that sort of distance.

 

Comparison of Roshni with other subsidised accommodation

35. It is apparent from Roshni’s accounts that the loss of public funding meant that it could not operate once it lost its public funding without substantially increasing rents.  It also appears, so far as I can presently tell, that the loss of public funding was the result of cut backs and not of any failings on its part, and that the new rental level was set to enable it to survive.  I also note from the accounts for the year ending 31 March 2011 that it was 98% full during that year, indicating considerable demand for its facilities.  The five comparables between them accommodate up to 83 women who have been victims of violence, although not all are in bedsitters and only two of them, with a maximum capacity for 17 women appear to concentrate on those from South Asia.  Roshni’s 9 places therefore appears to represent a 50% increase on what would otherwise be available in that respect and an 11% increase on total availability.

 

36. The most obvious comparator in terms of both size and funding issues is comparator 3, a charity whose rent was used to determine the level to which Roshni’s rent should be reduced.  It appears from page 4 of its accounts for the same year that it intended in the future to expand because people were being excluded due to the constraints of its current building.  This clearly further suggests the need for additional accommodation in the area which Roshni provides.  Comparator 3 provided accommodation at present for up to 8 women.  Its income for the year was £279,000 and its outgoings £297,000.  £173,000 of its income came from Supporting People and under £80,000 from accommodation charges. 

 

37. It follows that the cost per room for comparator 3 that year was over £34,000 of which about 58% was effectively subsidised by Supporting People.  Roshni’s accounts show that its operating costs had been reduced from £257,000 in the year to 31 March 2010 to £188,000 in the year to 31 March 2011, apparently, and without funding no doubt of necessity, a far leaner operation than that of comparator 3. 

 

38. I have looked also at the accounts of two of the other comparators covering the summer of 2010.  These are not as easy to compare with Roshni as comparator 3 as both appear to be larger bodies with significant other interests and funding.  One shows a significant degree of subsidy from Supporting People and others including Birmingham Council.  The other appears to rely almost entirely for its income on a source described only as “local authority contract payments”.  A fourth comparator appears to be an offshoot of a housing association the contact details of which appear from an internet search to be at the Birmingham Council Housing Department.  Its details do not appear on the Charity Commission website, as it is not a charity.  The final comparator is a very large and well known national charity with substantial funding.

 

39. At present I am unclear on what basis it can be said that the rent charged by Roshni was unreasonably high compared with these comparators given the level of funding they received and that Roshni was doing no more than seeking to charge a rent which would enable it to cover its costs which appear modest when compared with comparator 3, there being no easy way of comparing them with those of the other comparators.

 

40. If the council wishes to pursue its claim that the rent charged by Roshni was unreasonably high by comparison with the rents charged by these comparators, then it may provide further evidence and submissions as to this.  If it so contends then Roshni will have the opportunity to respond with both submissions and evidence.  I have given directions to enable this to happen.  These directions do not include the Secretary of State as I understand that he was only concerned to make submissions as to the principles involved and not the practical application in these particular cases. 

 

41. I have not considered in this decision how, if it were to be decided that the rent was unreasonably high, a council should exercise its discretion to reduce it.  If, however, the council does contend still that the rent was unreasonably high, then both the claimant and the council (and the Secretary of State if he wishes) should make submissions as to how I should exercise that discretion bearing in mind both the findings in this decision and the guidance of the Court of Appeal and House of Lords in R v Housing Benefits Review Board ex parte Mehanne, [2000] 1 WLR 16 and [2001] 1 WLR 539. 

 

 

 

(signed) Michael Mark

Judge of the Upper Tribunal

 

 30 August 2013