If someone who is in hospital has nowhere else to live, then surely the hospital is their "dwelling" - i.e. it is their place of residence. "Dwelling" is defined as "any residential accommodation", and a hospital can be residential accommodation.
Furthermore, to quote from the EXPLANATORY MEMORANDUM TO THE HOUSING BENEFIT AND COUNCIL TAX BENEFIT (MISCELLANEOUS AMENDMENTS) (No. 2) Regulations 2004:
"Regulation 2(3) amends regulation 5 of the Housing Benefit (General) Regulations and is a measure that extends the existing provision that enables people who have moved into a new dwelling and have a liability to make payments in respect of that dwelling, and could not reasonably have avoided a liability to make payments in respect of the former dwelling, ie, to give and serve a period of notice, to be treated as occupying the former dwelling as their home for up to a maximum period of four weeks. The amending regulation extends this provision to those in similar circumstances but who do not have a liability in respect of the new dwelling thus ensuring that this group also do not build up rent arrears where their continuing liability was unavoidable."
Given the clear policy intention, as outlined in the Circular and in the Explanatory Memorandum, I would argue very strongly that, having given up his tenancy, his residence in now in hospital, and Reg 5(5A) should apply.
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