News and developments
Updated Feb 2023
The Court of Appeal decision in Baptie v Kingston upon Thames concerned homeless applicants who lost their accommodation due to non-payment of rent.
How a local authority might assess an applicant's ability to pay rent when deciding if it was reasonable for them to continue living in their former home, and steps people facing homelessness due to unaffordable housing can take.
Why does affordability matter?
A local authority can avoid a full housing duty towards a homeless applicant who deliberately did, or failed to do, something that led to their homelessness. The law says they are intentionally homeless.
A person can be intentionally homeless from accommodation only if it was reasonable for them to continue living there. Affordability is one of the main factors. A person cannot be found intentionally homeless if their accommodation was unsuitable because it was not affordable. Affordability assessments look at the applicant's income and outgoings, not whether the property in question was expensive compared to others in the locality.
Suitability regulations set out what the local authority must consider when they decide whether the applicant’s last permanent home was affordable. They must take into account what income the applicant had, the amount of their rent, and their other reasonable living expenses.
If the local authority finds that a homeless applicant’s living expenses were not reasonable, it might decide that they could have paid their rent and find them intentionally homeless.
How are living expenses assessed?
The courts have issued conflicting decisions about what housing officers can look at when they assess whether someone's living expenses were reasonable.
In Samuels v Birmingham City Council, the Supreme Court considered the version of the Homelessness Code of Guidance in place in 2015 when the homeless application was made. The court held that housing was not affordable if the applicant was left with less money than they would be entitled to under jobseekers’ allowance (JSA) or income support.
The wording of the Code under which Samuels was decided recommended to local authorities that they find that accommodation was unaffordable if the applicant’s residual income was less than income support or JSA. Since then, JSA and income support have been almost entirely phased out and replaced by universal credit.
The updated 2018 Code of Guidance only refers to universal credit. It has removed the recommendation relied upon in Samuels, now saying authorities ‘may be guided by’ the standard allowance of universal credit as the minimum amount a person should be left with after paying their rent.
The standard allowance of universal credit does not include all the other elements and premiums a claimant could be entitled to if they have children or someone in the family has a disability.
This change in emphasis has left it open to the courts to interpret homelessness decisions differently if they were made under the updated Code.
Recent developments in case law
In Baptie v Kingston upon Thames, the Court of Appeal upheld a local authority's decision that a housing association tenant had made themselves homeless by failing to pay rent.
The local authority had decided that the rent due to the housing association was affordable. It decided the tenant had failed to claim tax credits and spent an unreasonable amount on living expenses. Therefore, the applicant had become homeless intentionally.
When assessing the reasonableness of the applicant’s living expenses, the local authority relied on figures contained in guidance issued by the Association of Housing Advice Services (AHAS).
On appeal, the County Court decided that the local authority's reliance on figures in the AHAS guidance was unlawful and that the correct approach to the affordability assessment was to consider the benefit cap as ‘a valuable sanity check’. The judge decided that the local authority's decision that the rent was affordable was irrational. The applicant did not become homeless intentionally, meaning the local authority owed them the full housing duty.
The local authority appealed to the Court of Appeal arguing that the reviewing officer was entitled to have regard to the AHAS guidance, and was not required to have regard to the benefit cap when considering expenses.
Minimum expenditure figures
The Court of Appeal held that the housing officer acted lawfully when they used figures for expenses contained in the AHAS guidance. The figures were intended to reflect reasonable minimum costs for a family. At the time, they suggested an allowance of £21 per person per week for food.
The Court of Appeal said the local authority could reach a conclusion about expenditure without comparing its figures with the maximum amount of benefit available to the family. The judgment cites the 2021 case of Patel v Hackney where the Court of Appeal stated:
“...loss of accommodation through the non-payment of rent requires an explanation that must satisfy a test of reasonableness. This cannot be satisfied simply by reference to how the applicant has chosen to spend the money available to him at the relevant time.”
In Patel, the Court of Appeal rejected the applicant’s argument that there was an inconsistency between the words 'reasonable living expenses' in the regulations, and 'basic essentials' in the Homelessness Code of Guidance. It held that the Code elaborates on the level of expenditure that it is reasonable for authorities to refer to.
A harsher landscape for homeless applicants
The Court of Appeal in Baptie and in Patel appears to have taken a harsher approach than the one recommended by the Supreme Court in Samuels, following the watered-down wording in the 2018 Code of Guidance. On that point, the leading judgment in Baptie comments:
“...the legal landscape was different in 2019, when the reviewer made her decision. There had been major changes in the benefit system in 2012 and 2016, and the language of the 2018 Code was significantly different”
In Samuels, the leading judgment is critical of the piecemeal approach taken by local authorities to assessments of affordability. Other Court of Appeal cases involving the updated Code appear to show there has been little improvement in this area.
High inflation and rising living costs
Local authority staff and tenants' representatives should take inflation into account when they use minimum figures.
The AHAS minimum expenditure figures updated in September 2021 are no longer in use. New figures were published in November 2022 which account for increases in inflation to August 2023.
The Standard Financial Statement is a budgeting tool produced by the government’s Money and Pensions Service to help debt advisers to produce statements of household income and expenditure for people in financial difficulty. Local authorities and advice agencies can apply to use it.
Practical steps for people in unaffordable housing
Advising people in unaffordable housing before they are evicted can help to ensure they have done everything they can to pay their rent. This can help them satisfy the local authority that they meet the reasonableness test when their expenditure is assessed.
Check benefits entitlements
Advisers should check whether their client is entitled to additional welfare benefits they have not yet claimed. For example, if a member of the household has mobility problems, they may be able to claim personal independence payment (PIP). A council or a housing association landlord could have staff whose role it is to help tenants make sure they are getting all the benefits they are entitled to.
Find out what help the local authority can offer
Tenants of social landlords could ask what additional support they can offer. This could include helping them with budgeting or accessing charitable or other local authority grants for things like replacement white goods, and energy bills.
Private tenants and homeowners could ask the local authority if they can offer any financial help, such as fuel or food vouchers through their household support fund.
Tenants could apply for a discretionary housing payment if their rent is higher than their universal credit housing costs element or housing benefit, or their benefit doesn’t cover the rent because of the bedroom tax.
Get budgeting and debt advice
Budgeting advice could help the tenant look properly at their spending and see what savings they could make. If they have other debts, including things like fuel and water arrears, refer them for specialist debt advice.
Local debt advice agencies are often better at dealing with complex debt issues. Other providers like StepChange and National Debtline can offer debt solutions over the phone. It’s a good idea to help the tenant find independent, impartial advice. A google search is likely to lead to lots of results for fee charging companies offering solutions the tenant doesn’t need.
Tenants should keep records of their conversations with their landlord, the DWP or housing benefit department, the local authority, and anyone they contact for advice. They should keep copies of all letters, emails, and applications they have made to show what steps they have taken to improve their financial situation.
Take emergency action
Tenants who are at immediate risk of eviction for rent arrears could consider applying for a breathing space moratorium which gives them protection for 60 days. This could buy vital time for them to get debt advice or apply for benefits.