Supreme Court considers intentionality and rent arrears

Housing Rights welcomes the recent decision of the Supreme Court in Samuels v Birmingham City Council [2019] UKSC28 in which Lord Carnwath stated that it was “hard to see on what basis the finding of intentional homelessness could be properly upheld” when the mother of four fell into rent arrears. The court held that the question to be asked is what are reasonable living expenses, (aside from rent), having regard to the needs of the applicant and any dependants.

In this particular case, the applicant was originally found to be intentionally homeless, as she did not use her other, non-housing benefits to make up the shortfall between her contractual rent and her Housing Benefit payments. Her inability to make up these shortfalls to her landlord led to eviction, but the council originally determined that the applicant effectively made herself homeless by falling into arrears and that her benefit income allowed enough room for her to both meet reasonable living expenses and pay the shortfall in her rent. Essentially, the decision maker felt that the living expenses the applicant had put forward were unreasonably high. The applicant’s argument rested on the fact that her non-housing benefits were only subsistence level benefits, designed to allow the recipient a basic income reflective of her household’s minimum needs, and that the household’s needs and associated expenses should be regarded as reasonable.

Legislative background and comparison to Northern Ireland

This particular case relied heavily on provisions in the Homelessness (Suitability of Accommodation) Order 1996, which specify that in determining if it is reasonable for a person to continue to occupy accommodation, consideration should be given to the affordability of said accommodation, taking into account the financial resources available.  

Although homelessness law in Northern Ireland closely reflects that in place in England and Wales, there is no statute directly comparable with this particular Order in Northern Ireland.  However, Article 3(3) of the Housing NI Order 1988 deals with the Housing Executive’s duties to those who are homeless or threatened with homelessness and requires that consideration be given to whether the accommodation was reasonable for the applicant to continue to occupy. When determining if a person became homeless intentionally, Article 6 of the 1988 Order holds that a person can only be considered to be intentionally homeless if it was reasonable for that person to continue to occupy said accommodation. 

Whilst Article 6(3) provides reassurance that” an act or omission in good faith on the part of a person who was unaware of any relevant fact shall not be treated as deliberate” there is no set framework for determining if rent or mortgage arrears have accrued notwithstanding reasonable household budgeting.  In the absence of legislative authority setting out how to determine suitability of accommodation when the applicant states that it is unaffordable, case-law and decision making guidance can assist. 

Guidance on affordability

It is our understanding that NIHE is reviewing homelessness guidance for use in Northern Ireland, but currently follows the Homelessness Code of Guidance for Local Authorities, published by the Ministry for Communities, Housing and Local Government. This document contains guidance on assessing whether an applicant’s living expenses are reasonable and states that consideration must be given to whether the applicant would have to deprive him or herself of basic essentials in order to meet their regular housing costs.

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 wider context of the applicant’s particular circumstances should be considered when considering their household expenditure especially when these are higher than might be expected. For example, an applicant with a disabled child may have higher travel costs to ensure that the child is able to access additional support or education that they require and so this should be taken into account when assessing their essential needs, and the income that they have available for accommodation costs.

This guidance, in addition to the Supreme Court’s recent decision show that any finding that an applicant is intentionally homeless because of rent arrears, is challengeable if due consideration has not been given as to the household’s specific needs and whether there is sufficient room in the household’s income to meet these needs in addition to bridging any gap between Housing Benefit and the amount of rent charged.

Learning points for advisers

As the introduction of Universal Credit and the ongoing benefits freeze continues to put a strain on people’s finances in Northern Ireland this judgment will assist advisers to support those facing homelessness due to increasing financial pressure.  Advisers who are challenging intentionality decisions related to arrears of housing costs may wish to include a full household budget for the client as part of representations. This will be beneficial if the facts show that the reasonable living costs of the household are just met by the subsistence benefits and that there is insufficient scope in the household’s finances to meet large shortfall payments indefinitely.