Court of Appeal rules that all benefit income to be included when assessing affordability

Carmel Ferguson, Housing Rights solicitor, looks at the case of Samuels v Birmingham City Council, in which a homeless applicant challenged the local authority's decision that she was intentionally homeless because she had been evicted from a previous property due to rent arrears.  The original decision maker had felt that Ms Samuels's rent was affordable when compared with her income.  Ms Samuels took her case to the court of appeal to argue that benefits income should not be taken into account when determining affordable housing costs.  

Facts of the case

Ms Samuels was a private tenant in receipt of housing benefit.  However, Ms Samuels was required to pay an additional  £151.49 each month towards her rent on top of what was paid in housing benefit. Ms Samuels, a mother of four, had learning difficulties and literacy issues. In completing her initial income and expenditure form, she had stated that her household costs were £150 per month. Her solicitor had amended the household costs on her review application to £750 per month.

The reviewing officer held that the revised figure of £750 was excessive, whilst accepting that the previous figure of £150 was equally likely to be inaccurate. He noted that she had confirmed during her homeless application that she could manage correspondence by reading slowly and that she was able to pay bills on time and manage her finances. He concluded that there was sufficient flexibility in her income to meet a weekly shortfall of rent of £34. He concluded that she had made herself intentionally homeless as she had failed to pay her rent.

The reviewing officer’s decision was upheld by the County Court. Ms Samuels appealed to the Court of Appeal. Ms Samuels argued that the starting point for considering whether a household can afford its outgoings is that income support, tax credits and child benefit are intended to provide a subsistence income to cover the costs of bringing up children.This income should not therefore be taken into account for the purposes of covering housing costs.

Rejected by the court of appeal

The Court of Appeal rejected the argument that income support, tax credits and child benefit should be excluded from income for the purposes of determining whether housing costs were affordable. The court considered an argument based on the case of Burnip v Birmingham. In that case, the court had concluded that it would be wrong in principle to regard subsistence benefits as notionally available to meet the shortfall in housing needs. The court held the case was not relevant as it was specific to the particular context of the discriminatory effect of the statutory criteria relating to housing benefit.

On the facts of the case the court found that Ms Samuels could and should have used the income from her benefits to pay the shortfall in her rent. It held that the decision that she had made herself internationally homeless was correct and dismissed her appeal.

Is the Homelessness Order 1996 relevant to Northern Ireland?

The Homelessness (Suitability of Accommodation) Order 1996, referred to in the case, does not apply in Northern Ireland.

The equivalent of the relevant section of the Housing Act in Northern Ireland 1996  is Article 6 of the Housing (Northern Ireland) Order 1988 which states:

“A person becomes homeless intentionally if he deliberately does or fails to do anything in consequence of which he ceases to occupy accommodation, whether in Northern Ireland or elsewhere, which is available for his occupation and which it would have been reasonable for him to continue to occupy”.

The court also relied on the Code of Guidance for local authorities. The Guidance states that accommodation should be regarded as not affordable if “the applicant would be left with a residual income less that the level of income support or income based job seekers allowance that is applicable to the applicant or would be applicable if he or she was entitled to claim such benefit.”

In the absence of a specific guidance for Northern Ireland, the same guidance is applied by the Northern Ireland Housing Executive in considering homeless applications.

A UK Court of Appeal judgment is “persuasive” in Northern Ireland courts. This means that although it is not binding, it generally would be followed by Northern Ireland court unless the Northern Ireland Court of Appeal had made a contrary finding.

Learning points for advisers

With the increased reliance on privately rented property in Northern Ireland, and increases in rent, affordability is likely to be an issue for many. If a tenant is evicted due to rent arrears, and presents as homeless, the Housing Executive has a duty to consider whether that home was affordable. This case highlights how important it is that a client's financial statement is completed carefully and accurately. The information provided must be detailed and credible.

In advising clients in budgeting matters generally, it should be made clear that all income including benefits will be taking in to account in deciding whether by failing to pay rent, a tenant has made themselves intentionally homeless.