Hi,

Can anyone help me with how housing benefit may see the below situation.

2 friends live together; one is the council tenant and has been for many years. A few years ago a friend moved in, the friend took over paying the rent and the actual tenant paid all bills, etc.

The friend cannot pay rent anymore and is looking into benefit entitlement. The tenant has a reasonable salary and is not entitled to any housing or council tax benefit.

The friend did not move in to take advantage of the housing benefit system as in over 8 years he has not claimed. I would also argue that it is more logical to rent a room to someone you can trust than a stranger.

The issue is about commercial rent (I think).
The friend has his own bedroom, bathroom etc, the rent he was paying did not get paid direct to tenant, but he paid it straight to council. This I am hoping can be argued as common sense as there was no need for the friend to pay it via the tenant.

The housing officer is aware of the full situation as rent arrears built up when the friend stopped paying, and thus the housing officer needed an explanation to why the tenant had not paid for a few months or court action would be taken.

I am concerned that benefits will state that this is not commercial rent. If they do grant housing benefit and then check with the housing officer at a later date and decide it’s not commercial after all could this create an overpayment?

I have looked at CH/1097/2004, which is quite helpful, but any more advice would be really good.

This is tricky, but based on the info given, I'm not sure there is a liability on which HB can be paid.

The "friend" has no (legal) liability to the LA. The tenant is still living there and, I assume, is the sole name on the agreement with the LA. I don't think this is one of those cases where the friend can be "treated" as being liable to the LA.

So, the only other possibility is whether the friend has a liability to the LA's tenant. Based on the info given, it could just be argued that the monies paid by the friend count as being paid to the tenant. But, in my view, that's a stretch. Based on the info available so far, the LA could go either way.

On the assumption that there is an actual liability, the issue of commerciality will probably be looked at - quite closely. While CH/1097/2004 assists, it is far from being the only authority in cases such as this. For example, CH/4305/2004 is worth taking a look at. And that is the problem with such cases. For every CD quoted in support of one side of the argument, there are plenty to quote from the other. For that reason, R(H) 1/03 is always recommended reading in cases where commerciality is at issue.

If the LA initially accepts that the agreement (between LA tenant & friend) is on a commercial basis, that decision can only be changed later if info / evidence was not disclosed, or was misrepresented, or there is a change of circs. If the LA makes an award in error, the ususal o/p rules would then apply in terms of recoverability.

It may be worth noting that if the clmt is awarded HB, and then the award eventually ends due to a change in circs (such as income), any further claim could be decided differently.

As for "contrived", I don't see anything in what has been posted to suggest such a finding would be justified.

I'm absolutely certain that there will be posts disagreeing with some of the above, but I hope it at least helps in terms of what may be looked at and considered.

Kevin

I'd broadly agree with what you have said so far. I have a question though. In LA tenancies there is usually a term that prevents sub-letting without the written consent of the council.

Now, as I'm sure you're aware, in Bruton v Quadrant Park Housing the HL decided that Mr Bruton did have a tenancy even though Quadrant Park (the inferior landlord)had no legal right to grant him one, as they were prevented from so doing by the terms of the lease they had with the LA (the superior landlord).

However, this was for the purpose of Mr Bruton being able to enforce landlord repairing obligations under the Landlord and Tenant Act 1985.

What would HB's position be in a similar situation?

Regards
Paul

Hi Paul,

In fairness, I'm not familiar with the Bruton case, so I may be at a disadvantage. But, I noted this from the original post:

"rent arrears built up when the friend stopped paying, and thus the housing officer needed an explanation to why the tenant had not paid for a few months or court action would be taken."

That seems to strongly suggest that it the "proper" tenant only that has a genuine liability to the LA. Barring Housing law suggesting otherwise, I don't see how the LA could ever seek redress from the "friend" in the event of rent arrears. For that reason, I don't see how, in this case, that the friend could ever be properly treated as being liable for the "proper" tenant's rent. Just to avoid any ambiguity, I'd readily accept it would be a whole different ball game if the friend was the only occupier and the "proper" tenant was elsewhere.

I'm also not suggesting that there cannot be an agreement between the "proper" tenant and the "friend", irrespective of terms preventing sub-leasing. But, as stated in my earlier post, it does seem a bit of a stretch that this is the true situation in this case - at least based on the info given so far.

I suppose one option *might* be to suggest that there is in fact already an agreement between the tenant and the friend - it merely needs formalising (assuming of course that it is the truth). The only snag with such an approach is that it may have the appearance of being done only for HB purposes. In turn, the LA *may* then look on the liability as being created to take advantage etc. It wouldn't be, but it has the capacity to attract that kind of LA thought process.

Regards

I'm largely in agreement. The head tenent is liable to the landlord for teh rent. The friend is a licensee of the tenant. It is a contractual lisence the remuneration for which is an amount equivalent to the head tenant's rent. For convenience the licensee paid this directly to the head landlord. The head tenant's lease may well prohibit this, but the housing officer knew the arranegment and took no action about it so arguably the landlord has granted a waiver. In any case I dont see that that is relavent for HB purposes.

When the licensee failed to pay the landlord, the tenant fell into arrears. That is clearly the tenants liability, although arguably if proceedings where brought by the landlord for the arrears, the tenant may seek an indemnity from the licensee, but that would not in itself protect him from eviction.

So, licensee claims HB. He is claiming in respect of his liability for his lisence agreement with the tenant. I don't think there is a problem with that provided the terms of the agreement were reasonably clear. Would need to show the "rent" was set in reference to the head tenants rent. In respect of commerciality, there is nothing per se to prevent friends having a commercial agremeent. Some questions that might be relavent:

The tenants need for rent from the lisencee
The licensee's need for accomodation
What action the tenant took when the licensee fell into arrears
Is there an agreement for the arrears to be cleared?
Would the tenant evict the licensee due to teh arrears?
How does the charge for the license compare with other private rents in the area for room with shared amenities?
Is there evidence of the licensee paying, i.e can the payments to the landlord be traced back?

Thanks guys. You have echoed my thinking but I'm still unsure about the specific answer to this one question. Forget the facts of this case for a minute.

If a tenant has not had the written permission of the landlord to sub-let but rents a room and charges rent thus creating a license, is HB payable given that the sub-letting is in breach of the tenant's contract with the landlord?

Yes. (IMHO)

Thanks.

The Housing officer is happy for the tenant to have someone live with him and is happy for the tenant to accept money for this... so it appears that the tenancy is not at risk.

There is a difference between your client taking in a lodger, who pays towards the rent, and sub-letting. Most secure tenancy agreements specifically disallow sub-letting, but allow lodgers with permission. This is to prevent an unauthorised person from aquiring tenancy rights. I would be wary of considering that the Housing Officer's permission for someone to live with your client and help towards the rent is a waiver regarding sub-letting. You need to check the tenancy agreement. If sub-letting is disallowed, your client could be at risk of losing his home.

Section 93 of the Housing Act 1985 is as follows.

93(1)It is a term of every secure tenancy that the tenant-
(a)may allow any persons to reside as lodgers in the dwelling-
house, but
(b)will not, without the written consent of the landlord, sublet
or part with possession of the dwelling-house.

I should have added that section 94 states that consent should not be unreasonably withheld and, if so unreasonably withheld, consent shall be treated as given. It is up to the landlord to show that withholding consent was not unreasonable if a question arises.

I broadly agree with all that KevinD has said on your case.

In answer to the question over whether Hb could be payable if an La tenant (or HA tenant) decides to "sublet" a room to someone, the answer is yes.

I think we can understand an La's position on someone subletting the whole house but there is no "bar" in Hb which stops someone from letting a room whether food is provided or not.

This isnt just the case for La tenancies; it may well be a breach of the senior landlords tenancy conditions to let a room but this alone would not prevent the possible payment/eligibility to Hb for such a tenant.

I beieve he is classed as a lodger but have advised the client to talk to his housing officer to confirm the situation... no meals are provided though so he is not a boarder?

Any ideas??

It doesn't matter whether or not meals are provided. What matters is:

1) that there is a GENUINE liability for the "lodger" to make payments to the "proper" tenant; AND either,

2) if there is a genuine liability, that the tenancy (or agreement) is on a commercial basis; OR

3) again, if there is a genuine liability, that the liability has not been created to take advantage of the HB scheme.


The only relevance of meals is that a fixed amount for meals would not be eligible for HB; and separately, it the provision of meals *may* be a factor in looking at the living arrangements in terms of commerciality etc.

Regards