Topics
Case Overview and Issue
1. This document details a UK Upper Tribunal (Administrative Appeals Chamber) case regarding a claimant, ET, and her housing benefit entitlement while living in supported accommodation administered by Rossendale Borough Council.1ET v Rossendale BC [2010] UKUT 222 (AAC)
2. The central issue is whether Rossendale correctly restricted ET’s eligible rent by disallowing a portion of the concierge charge, specifically concerning management/administration costs and allowances for void periods/bad debts.
3. The case is treated as a test case affecting the housing benefit entitlements of others subject to similar charges.
Key Legal Points and Regulations
Exempt Accommodation
4. The accommodation is classified as ‘exempt accommodation’ under paragraph 4(10) of Schedule 3 of the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006. This classification triggers the application of “alternative regulation 12” and “alternative regulation 13” of the Housing Benefit Regulations 2006, as defined in paragraph 5 of Schedule 3 of the former.
Eligible Rent (Alternative Regulation 12)
5. Housing benefit is payable for payments of rent, licence fees, and service charges that are conditions of occupancy. However, the eligible rent is reduced by any ineligible service charges.
6. Alternative regulation 12(3) refers to Schedule 1 of the Housing Benefit Regulations, which addresses ineligible service charges. Crucially, these rules on ineligible service charges apply equally to both ordinary and exempt accommodation.
Restrictions on Unreasonable Payments (Alternative Regulation 13)
7. This regulation allows the local authority to reduce eligible rent if the rent is unreasonably high compared to suitable alternative accommodation. However, paragraph 4(10) outlines a specific provision for individuals deemed incapable of work, and no deduction can be made under paragraph (3) unless cheaper accommodation is available and moving is deemed reasonable, especially considering security of tenure (paragraph 9(a)) and impact on employment and education (paragraph 9(b)).
Ineligible Service Charges (Schedule 1)
8. Part 1 of Schedule 1 outlines various ineligible service charges, including day-to-day living expenses (meals, laundry, leisure items, cleaning), acquisition/use of furniture that will become the claimant’s property, emergency alarm systems, medical expenses, nursing/personal care, general counselling/support services, and services “not connected with the provision of adequate accommodation” (paragraph 1(g)).
9. Paragraph 3 outlines the process for apportioning charges when an ineligible service charge is not separately identified.
Excessive Service Costs (Paragraph 4)
10. The relevant authority can deduct the excess amount from a service charge deemed excessive relative to the service provided, “having regard to the cost of comparable services.”
Tribunal’s Findings and Arguments on Appeal
Concierge Charge
11. The local authority accepted in principle that a concierge charge could be eligible for housing benefit as it is property related, but disputed the amount of the charge.
12. The tribunal disallowed a significant portion of the claimed management and administration costs associated with the concierge service, finding that the claimed 43.7% of the managers’ salaries attributed to overseeing the security staff was “excessive” and “unjustifiable.” The tribunal found the landlords were unable to adequately justify the high percentage.
13. ET’s representatives argued that the charge should be viewed as a whole and that the lack of “comparables” (examples of similar concierge services elsewhere) meant the tribunal couldn’t lawfully deem the charge excessive.
Void Periods and Bad Debts
14. The original tribunal reduced the allowance for void periods and bad debts from 10% to 5%, based on the presenting officer’s experience that 5% was more typical.
15. ET’s representatives argued that the presenting officer’s evidence was “hearsay” and that 10% was a “standard amount.”
Upper Tribunal Judge Poynter’s Reasoning and Decision
Management and Administration Costs
16. The Upper Tribunal Judge upholds the original tribunal’s decision, stating that forming part of the contractual rent is necessary but not sufficient for a service charge to be met by housing benefit. Schedule 1 lists ineligible charges even if contractually required.
17. The Upper Tribunal Judge confirms that local authorities can scrutinise the breakdown of service charges, even if not separately identified (referencing R(IS) 2/07 which stresses detailed evidence of staff time devoted to services).
18. The judge emphasises that the tribunal believed the concierge service could be provided even without the disputed portion of the charge.
19. Regarding “comparables,” the Upper Tribunal Judge acknowledges that the original tribunal misquoted the law. However, he clarifies that while considering “comparable services” is important, it’s not necessarily a precondition for deeming a charge excessive. The primary obligation is to assess whether the charge is excessive “in relation to the service provided” (paragraphs 26-27) and comparable charges are only relevant to the way in which the decision is made: the decision maker must ‘have regard’ to them while making it. If no comparables are available, the absence does not prevent the exercise of power in paragraph 4 “if there is other material on which it can properly be concluded that the amount of a service charge is excessive in relation to the service provided for the claimant or his family.”
20. The judge ruled that it was up to ET to prove that the increased service charges were eligible, it was not up to Rossendale to prove that they were not.
Void Periods and Bad Debts
21. The Upper Tribunal Judge dismisses the appeal on this point, stating that the presenting officer’s evidence was indeed evidence and that tribunals are not bound by strict rules of evidence.
22. He reiterates that the burden was on ET to prove the 10% provision was appropriate, and they failed to do so.
23. The judge emphasises that there is no “standard” 10% allowance for voids and bad debts and that the appropriate rate varies from case to case. He also notes that in supported housing schemes where residents are primarily on housing benefit, the risk of bad debts should be lower than in the private rented sector. He cautions against landlords using “bad debts” as a backdoor to claim for excessive charges.
24. Judge Poynter stated that the tribunal’s original decision was a matter of fact, not law, and therefore not open to interference by the Upper Tribunal.
25. Decision: The appeal is refused. The original tribunal’s decision did not involve any material error of law.
Practical Advice for Future Cases (Embedded in the Decision)
26. The Upper Tribunal Judge provides specific advice for future cases involving similar charges. He urges landlords to provide detailed information to justify management and administration costs, including:
27. Full job descriptions for the administrator and manager.
28. A log of the hours and minutes allegedly spent on the concierge service.
29. Specific details of the tasks performed by the administrator and manager in relation to the concierge service, and how they spend the rest of their time.
30. A clear explanation of how the landlords arrived at the percentage allocated to management and administration.
31. The judge also highlights the need for landlords to provide evidence to support their provision for void periods and bad debts, referencing past experiences of void periods/bad debt levels or, for new schemes, evidence from other, similar schemes.
Key Quotes
“Unless the service charge formed part of ET’s contractual rent she would not be legally liable to pay it and, as housing benefit can only meet charges for which the claimant is legally liable, the charge would be ineligible on that basis without having to consider the exclusions and restrictions in Schedule 1. In other words, forming part of the claimant’s rent is a necessary condition for a service charge to be met by housing benefit.” (Paragraph 17)
“It is an obligation to consider such charges [comparable charges] but, once the decision maker has considered them, the decision maker is entitled to disregard those charges if s/he is then to form the view that, in the particular circumstances of the case, such charges are irrelevant to the decision s/he has to make.” (Paragraph 27)
“In order to determine whether a charge is excessive it is necessary to consider all the circumstances including, but not limited to, the charge levied by a comparator if a genuine comparator can be found.” (Paragraph 32)
“…Care must be taken to ensure that landlords do not receive housing benefit for ineligible or excessive rents and charges through the back door by classing them as bad debts and then adding a provision for those bad debts to the rents of other tenants, in the hope that it will be held to be eligible.” (Paragraph 48)
Conclusion
32. This case provides important clarification on how housing benefit regulations are applied in the context of supported accommodation, particularly concerning the eligibility of service charges. It underscores the importance of providing detailed and justifiable evidence to support claimed charges and highlights the discretion afforded to local authorities and tribunals in assessing the reasonableness of those charges. It confirms that comparisons are relevant to the decision-making process but are not the be-all and end-all.
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