| Case Name | [2019] UKUT 304 (AAC) |
| Case law date | 08/10/2019 |
| Judge | CG Ward |
| Organisations/Entities Involved | 1. Allerdale BC |
| 2. JD and others. | |
| 3. Inclusion Housing CIC Ltd (Inclusion) | |
| Legal References | Housing Benefit Regulations 2006 – Specifically, paragraph 1(f) of Schedule 1 (which sets out ineligible service charges) and the concept of “exempt accommodation.” |
| Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006 – Specifically, Schedule 3 and the definition of ‘exempt accommodation’. |
Overview
Enhanced Housing Management Charge (EHMC)
1. The main dispute revolves around the Enhanced Housing Management Charge (EHMC) (aka intensive housing management) and its status as an eligible or ineligible service charge.
2. The First-tier Tribunal initially decided that EHMC was not an ineligible service charge based on the unique housing management services required due to the tenants’ disabilities.
Relationship between EHMC and the definition of “exempt accommodation.”
3. There’s a complex relationship between the concept of services that are excluded from housing benefits and the definition of “exempt accommodation.” The two concepts serve different purposes and should be treated separately.
Portion of EHMC ineligible for HB
4. Judge Ward set aside the First-tier Tribunal’s decision and determined that a portion of the EHMC, management overhead on rent, and voids on rent should be deducted from the eligible rent for housing benefit purposes.
5. The hearing was adjourned to allow parties to identify what services within the EHMC were excluded services. An agreement was reached on 85% of these services. 43% of the 85% were agreed to amount to ineligible services. Further, a few services remained to be adjudicated (para 31).
6. Three services were specifically addressed within the EHMC:
- Advising and assisting tenants with benefit claims,
- Rent collection, and
- Linking into local health and disability networks.
7. Advising and Assisting Tenants: Service is seen as a part of housing management and mainly not an ineligible service. In the Judge’s view the 5% of the EHMC apportioned to this activity needs itself to be apportioned between what would be routine eligible housing management in relation to, in particular, housing benefit claims and broader work (e.g. in relation to the “other correspondence”) which is aiming to meet the particular needs of the resident group. The proposition that what constitutes housing management has to be looked at in the context of the particular cohort of residents tends to increase the eligible proportion so I rule that 3% is to be treated as eligible and 2% ineligible (para 31).
8. Rent Collection: Direct payment of housing benefit does not eliminate the function. The service is accepted as a proper part of housing management. 5% is eligible.
9. Linking into Health and Disability Networks: Largely seen as an ineligible support service, contributing to residents’ well-being. 1% eligible, 4% ineligible.
10. The judge’s decisions on eligibility were based on the nature of the service provided and the needs of the resident group.
Linkage between ineligible services and exempt accommodation status
11. Judge Ward emphasised the need for each case to be examined on evidence rather than presumed linkages between the two concepts of ‘exempt accommodation’ and excluded services.
12. The case delves into the legislative history of provisions related to exempt accommodation and ineligible services, concerning prior interpretations and regulations.
Decision
13. The decision of the First-tier Tribunal was set aside. Judge Ward remade the decision regarding the eligible rent and its deductions concerning the EHMC, Management Overhead on Rent, and Voids on Rent. Judge Ward declined to rule on the status of “exempt accommodation”.
What is Enhanced Housing Management Charge (EHMC)
14. The EHMC is a charge included in the rent and service charge breakdown provided by the landlord, Inclusion Housing. It is described as the “Intensive Housing Management Service”. (para 3)
The subject of the dispute was what is termed the Enhanced Housing
Management Charge (“EHMC”). The service charge and rent breakdown of the scheme is in evidence and includes a line under the overall heading of “Rent” for what is described there as the “Intensive Housing Management Service” but which it has not been suggested is not the same thing as the Enhanced Housing Management Service. I use the latter term in this decision. There is not a further line for, as it were, an “ordinary” housing management service. The EHMC thus does not solely extend to the particular features of housing management required in order to meet the needs of the cohort of residents but also encompasses the housing management which would be needed in any social housing project or, indeed, any project providing rented housing. (para 3)
15. The EHMC represents charges for additional housing management services related to the disabilities and vulnerabilities of the tenants. (para 15 – Tribunal decision).
As regards the matter which had been the subject of the decisions under appeal to it, the FtT’s decision notice found that the EHMC was eligible for housing benefit, continuing:
“It is not a service charge within the meaning of paragraph 1(f) of
Schedule 1 of the [HB Regulations]. The service provided by the
landlord is management of accommodation that requires extra housing management services because of the disabilities and vulnerabilities of the tenant.” (para 15 – Tribunal decision).
16. It does not include charges for standard housing management services that would be provided to any tenants. Rather, it relates to services tailored to the particular needs of this group of residents (paras 25)
25. It is accepted by both parties that what is involved in housing
management will differ according to the attributes and needs of those being housed: see e.g. CIS/1460/95. Absent the legislative history of schedule para 1(f), one might conclude that such matters did not constitute “general counselling or other support services“ at all, but simply housing management tailored to meet the needs of this cohort of residents..(paras 25)
Council’s view of the EHMC
17. The Council decided the EHMC represented charges for “general counselling or other support services” excluded from housing benefit under Para 1(f), Schedule 1 of the Housing Benefit Regulations. (para 16 – Tribunal failed to examine this issue properly)
18. Therefore, the Council considered the EHMC to be an ineligible service charge not covered by housing benefit. (para 4)
19. The Council excluded the weekly amount attributed to the EHMC from the eligible rent used to calculate the tenants’ housing benefit awards. (para 4)
Inclusion Housing’s view of the EHMC
20. Inclusion argued the EHMC covered additional housing management services needed due to the tenants’ disabilities, not excluded support services. (para 15 – Tribunal decision)
Tribunal’s view of the EHMC
21. The Tribunal agreed with Inclusion that the EHMC related to extra housing management services needed because of the tenants’ disabilities. (para 15)
22. It held the EHMC was not an ineligible service charge within Para 1(f) of Schedule 1. (para 15)
15. As regards the matter which had been the subject of the decisions under appeal to it, the FtT’s decision notice found that the EHMC was eligible for housing benefit, continuing:
“It is not a service charge within the meaning of paragraph 1(f) of
Schedule 1 of the [HB Regulations]. The service provided by the
landlord is management of accommodation that requires extra housing management services because of the disabilities and vulnerabilities of the tenant.” (para 15)
Upper Tribunal’s view of the EHMC
23. The Upper Tribunal held the Tribunal had not properly examined the legislative history of Para 1(f). (paras 16, 24-25)
24. The history showed services could be excluded even if part of housing management for a particular tenant group. (para 25)
25. It is accepted by both parties that what is involved in housing
management will differ according to the attributes and needs of those being housed: see e.g. CIS/1460/95. Absent the legislative history of schedule para 1(f), one might conclude that such matters did not constitute “general counselling or other support services“ at all, but simply housing management tailored to meet the needs of this cohort of residents. However, the legislative history points in a different direction. Thus, in the version in force at May 1997 (see [18]), it was envisaged that things which were “general counselling or other support services” might “relate to the provision of adequate
accommodation”: it was not that they were simply part of housing
management, but rather fell within the quoted words and so were potentially vulnerable to being treated as excluded services. However, because of their connection with the provision of adequate accommodation they were nonetheless considered the proper subject of housing benefit at that time.
25. Therefore, the Tribunal should have determined what part of the EHMC was an ineligible service charge. (para 29 – deduction required for ineligible charges)
29. It follows that the local authority is correct in saying that a deduction needed to be made. By para 3(1) of Schedule 1 of the HB Regulations:
“Subject to paragraph 2 where an ineligible service charge is not
separated from or separately identified within other payments made by
the occupier in respect of the dwelling, the appropriate authority shall
apportion such charge as is fairly attributable to the provision of that
service, having regard to the cost of comparable services and such
portion of those payments shall be ineligible to be met by housing
benefit.” (Paragraph 2 is not material in this case). (para 29)
Enhanced Housing Management Charge (EHMC) and the definition of “exempt accommodation”
26. “Exempt accommodation” is defined in legislation as accommodation provided by certain non-profit organisations where care, support or supervision is also provided to the tenant. (para 8)
27. The definition requires the provision of something “additional” beyond ordinary housing management functions. (para 13 – guidance from previous case law)
13. Guidance as to how “support” is to be understood in the context of
housing management is provided by Mr Commissioner Turnbull’s decision in R(H)4/09 (the Golden Lane Housing case) where he observed:
“25. It is implicit in the approaches adopted by all parties that the word “support” involves the landlord doing something more than or different from the exercise of its ordinary property management functions. That must in my judgment be right. A landlord does not in my judgment “provide … support” to a tenant, in the context of the definition of “exempt accommodation”, by doing what any prudent landlord would do in the management of its property. To take an obvious example, a landlord does not provide support by complying with its repairing obligations, however beneficial to the tenant that may be. However, it becomes apparent when one examines some of the activities of GLH which are said on its behalf to amount to support that there is in some cases room for debate whether they go beyond what the ordinary landlord would do in managing the property. In such cases it is in my judgment relevant, in determining whether support is provided to a more than minimal extent, to have regard to the extent to which the alleged support is allied to ordinary property management.” (para 13 – guidance from previous case law)
Council’s argument on the relationship between EHMC and exempt accommodation status
28. The Council argued that if the EHMC was found to be eligible for housing benefit rather than an excluded service charge, this would undermine the status of the accommodation as “exempt accommodation”. (para 5)
5. The status of the accommodation forming the subject of each of the
tenancies as “exempt accommodation” under sch 3 of the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006/217 (“the Consequential Provisions Regulations”) had not been raised by the original decisions under appeal. However, at the hearing before the FtT, it was the authority’s case (CD, pp221-222) that if the charge was not an ineligible service charge, that would call into question the status of the accommodation as “exempt accommodation.” Inclusion’s representative meanwhile (p227) was at pains to stress the status as “exempt accommodation”. (para 5)
Inclusion Housing’s Argument on Relationship
29. Inclusion stressed the accommodation was “exempt accommodation” and argued this was not affected by the issues around the EHMC. They said the two issues could be considered separately.
Tribunal’s Approach to Relationship
30. Despite the decision not engaging exempt accommodation status, the Tribunal went on to consider and uphold the exempt status of the accommodation. (para 6)
It appears to have accepted the Council’s contention that the issues were linked. (para 7 – question from the judge giving permission to appeal)
Upper Tribunal’s Analysis of Relationship
31. The Upper Tribunal held the Tribunal was wrong to make a link between the two issues. (para 30) It found they served different purposes and the definition of exempt accommodation was separate to the rules on excluded services. The Tribunal did not need to consider exempt status, and it exercising its discretion to do so was legally flawed. The two issues needed to be examined independently on the evidence.
30. Returning to the question posed by the judge giving permission to appeal, is there a correlation between excluded services and exempt accommodation? As I have sought to show at [9] and [24] the two
mechanisms have fundamentally different purposes. Para 1 of Schedule 1 additionally serves wider purposes: it is, for instance, not only the cohort of potential residents of exempt accommodation who are affected by the exclusion of day-to-day living expenses by para 1(a) of schedule 1. While “general counselling or other support services” may have acquired what I regard as an extended meaning in the light of its legislative history, the phrase relating to ”exempt accommodation” is a different one – “care, support or supervision”. The two phrases have a word in common – “support” – but the context of the two is different. The legislator has not sought to define the word and in my view it takes its colour from the phrases of which it forms part
and the differing contexts in which those phrases are used. That the two provisions are capable of operating independently is further shown by para 3(b) of the (specific) reg.12, quoted at [10] above. I therefore do not consider it is appropriate to make the link between there being services which escape being excluded services on the one hand and loss of “exempt accommodation” status on the other. In my view, each needs to be examined on the evidence before the tribunal in cases where the respective points arise. The present appeals, as noted above, did not concern loss of “exempt accommodation” status (unlike, for instance, the appeal in Chorley BC v IT (HB) [2009] UKUT 107 (AAC)), which was precipitated by the decision of the local authority to restrict the eligible rent to the local reference rent (something it could not do if the accommodation constituted “exempt accommodation”). In my view the present tribunal was led astray by the local authority’s
submission; it did not need to rule on “exempt accommodation” and, while it had a discretion to consider matters beyond those raised by the appeal, it appears that the exercise of that discretion was legally flawed, being based on the basis, erroneous as I have held it to be, that there was a structural link between the two concepts. It follows that in remaking the FtT’s decision having set it aside, I do not address whether or not the scheme as it now stands represents “exempt accommodation”, as to which I remain neutral.