Upper Tribunal (Administrative Appeals Chamber)

DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

The appeal by Blackburn with Darwen Borough Council to the Upper Tribunal is allowed. The decision of the Blackburn First-tier Tribunal dated 2 July 2013 involved an error on a point of law and is set aside. It is appropriate for the Upper Tribunal to re-make the decision on the claimant’s appeal against the decision of 22 February 2013 (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(ii) and (4)). The decision as re-made is that the claimant’s appeal is disallowed and the claimant is not entitled to housing benefit on the claim made on the form signed on 10 February 2013.

REASONS FOR DECISION

1. The claimant submitted his written claim form for housing benefit, signed on 10 February 2013, on 11 February 2013 at an appointment made in a telephone call on 4 February 2013. On the form he gave the address of his flat and recorded the weekly amount of rent as £28.61, although it was clear from the accompanying letter of 12 February 2012 from Places for People Homes, his landlord, that that amount represented ground rent and various service charges. The claimant also ticked the box for having owned the property. The local authority carried out a Land Registry check on the internet (pages 27 to 29 of the papers). That revealed that the claimant was registered with absolute leasehold title under a lease for 125 years from 24 October 1994 granted by the North British Housing Association Ltd.. The entry mentions that the lease was made pursuant to Part V of the Housing Act 1985, ie the “right to buy” legislation.

2. On that evidence, the local authority made the decision on 22 February 2013 not to allow the claim, for this reason as set out in the letter of the same date:

“We are unable to pay your service charges for the above property as they are not part of a weekly rent liability. We can only pay Housing Benefit if you are actually renting the property from a Landlord, but as you are the owner of the property, you are not eligible to claim Housing Benefit under Housing Benefit Regulation 2006 – Reg 12.”

3. The terms used in that letter have set off this case in a slightly muddled direction that has contributed to later confusions. That is because, although in the everyday use of language the claimant could be described as the owner of his flat, he is not an owner within the particular definition of that word for the purposes of the Housing Benefit Regulations 2006 (“the 2006 Regulations”).

4. Regulation 12(1) of 2006 Regulations sets out the categories of payments for which, subject to the rest of the regulation, housing benefit can be payable. They include service charges payment of which is a condition of occupation of the dwelling concerned (sub-paragraph (e)). But regulation 12(2) sets out payments for which housing benefit cannot be payable and therefore takes precedence over regulation 12(1). The categories excluded by regulation 12(2) include “payments under a long tenancy except a shared ownership tenancy” (sub-paragraph (a)) and “payments by an owner” (sub-paragraph (c)).

5. For the purposes of the 2006 Regulations “owner” is defined in regulation 2(1) to mean:

“(a) in relation to a dwelling in England and Wales, the person who, otherwise than as a mortgagee in possession, is for the time being entitled to dispose of the fee simple, whether or not with the consent of other joint owners;

  (b) [only applies to Scotland];”

“Long tenancy” is defined to mean:

“a tenancy granted for a term of years certain exceeding twenty one years, whether or not the tenancy is, or may become, terminable before the end of that term by notice given by or to the tenant or by re-entry, forfeiture (or, in Scotland, irritancy) or otherwise and includes a lease for a term fixed by law under a grant with a covenant or obligation for perpetual renewal unless it is a lease by sub-demise from one which is not a long tenancy;”

“Shared ownership tenancy” is defined to mean:

“(a) in relation to England and Wales, a lease granted on payment of a premium calculated by reference to a percentage of the value of the dwelling or the cost of providing it;

  (b) in relation to Scotland, an agreement by virtue of which the tenant of a dwelling of which he and the landlord are joint owners is the tenant in respect of the landlord’s interest in the dwelling or by virtue of which the tenant has the right to purchase the dwelling or the whole or part of the landlord’s interest therein;”

6. The claimant in the present case is therefore not an owner within the regulation 2(1) definition. The “fee simple” is the estate held by the owner of the freehold of his flat, ie Places for People Homes. He is only entitled to dispose of his leasehold interest, which is not a “fee simple”. I am not going to enter into any further explanation of the concept of the “fee simple” here. The propositions just stated are simply elementary building blocks in the structure of the English and Welsh law of real property.

7. However, the claimant does have a “long tenancy” as defined. His tenancy was granted for a term of more than 21 years. It must have been created by deed because it was accepted for registration by the Land Registry (as required for the creation of a legal tenancy for a term of more than seven years and therefore as the “grant” of a tenancy: see decision R(H) 3/07). If so, then any payments under that tenancy cannot count for housing benefit purposes (2006 Regulations, regulation 12(2)(a)).

8. The only issue that needs further brief consideration is whether the claimant has a “shared ownership tenancy”. The literal words of head (a) of the definition might seem to apply, in that under the right to buy legislation the claimant would have received a percentage discount on the value of the flat and in that sense paid a premium for the grant of his 125 year lease calculated by reference to a percentage of the value of the flat. It would, though, be extraordinary, and in my view could not possibly have been contemplated when the 2006 Regulations were drafted, if payments under all long tenancies granted under the right to buy legislation (where by definition there would have been a discount) were brought back into the scope of housing benefit through the definition of “shared ownership tenancy”. In my judgment, the literal words of paragraph (a) of the definition must be qualified by reading in some element of sharing of ownership and, for these purposes ownership must be given its everyday meaning. A shared ownership tenancy is one in which the tenant, in the case of a flat, takes a long-term leasehold interest in only part of the dwelling concerned (typically, 25%, 50% or 75%), while paying rent as a short-term tenant would on the remainder. The tenant then has the right to buy additional percentages on the long-term basis, when amount of the short-term rent will reduce proportionately. The essence is that there is a sharing of what would in ordinary language be regarded as the ownership of the dwelling, between the tenant in the case of the long-term tenancy element and the landlord in the case of the short-term tenancy aspect. The claimant here did not share the ownership of his flat in that sense, and neither would anyone else who acquired a long tenancy of the dwelling as a whole under the right to buy legislation. His ownership under the 125 lease was not shared with the landlord in that sense, even though there was still a split between the freehold interest of the landlord and his leasehold interest. Therefore, the ordinary application of regulation 12(2)(a) of the 2006 Regulations to long tenancies was not excluded in the claimant’s case. That conclusion is in my view confirmed by the terms of head (b) of the definition of “shared ownership tenancy” applying to Scotland. There would be no rational reason for applying a different practical policy to the scope of the application of regulation 12(2)(a) as between Scotland and England and Wales.

9. When the claimant appealed against the decision of 22 February 2013, the written submission to the First-tier Tribunal persisted in arguing that he was an owner and that it was regulation 12(2)(c) of the 2006 Regulations that was relevant, but did go on to submit that, if the claimant was not an owner, he had a long tenancy, so that payment in respect of the service charges was excluded under regulation 12(2)(a). Unfortunately, regulation 12(2)(a) was not set out in section 6 of the submission with the other relevant legislation.

10. The appeal came before the tribunal on 2 July 2013, with a representative of the local authority present, but not the claimant. According to the statement of reasons signed on 10 November 2013, the tribunal correctly identified that the claimant was not an owner, so that regulation 12(2)(c) of the 2006 Regulations did not apply. It then went on, apparently forgetting about the potential relevance of regulation 12(2)(a), to find, as must have been right even though no copy of the lease itself was in evidence, that payment of the service charges was required under the lease and thus a condition of occupation and that so many of the charges as were eligible under the ordinary service charge rules could be met by housing benefit.

11. However, as shown above and as argued by the local authority on the appeal to the Upper Tribunal (although still, with respect, in a somewhat confused way), the service charge payments were made under a long tenancy as defined for the purposes of the 2006 Regulations, so that, by virtue of regulation 12(2)(a), housing benefit could not be paid in respect of any of those payments. As no other payments were put forward by the claimant as possibly coming within the scope of housing benefit, the only possible conclusion in law was that he was not entitled to housing benefit on the claim under consideration.

12. Accordingly, the tribunal went wrong in law in allowing the claimant’s appeal and in making a decision that was inconsistent with that conclusion. Its decision must be set aside for that reason. There is no point in remitting the case to the First-tier Tribunal for reconsideration, as the primary facts are not in dispute and on that basis there is only one legally possible decision that can be made. The Upper Tribunal therefore substitutes the decision that the claimant’s appeal against the decision of 22 February 2013 is disallowed and that he is not entitled to housing benefit on the claim under consideration.

13. I should add for completeness, as the claimant appears to have been in receipt of income support at the date of the housing benefit claim, that payments of ground rent under a long tenancy (defined in the same terms in the Income Support (General) Regulations 1987) and certain service charges are housing costs that can be included in the income support applicable amount.

(Signed on original): J Mesher

Judge of the Upper Tribunal

Date: 25 September 2014