1. RTJ/DTJ ANNUAL CONFERENCE Rent Restrictions Glasgow 24 March 2015

2. Rent restrictions –Universal Credit Regulations 2013, Sch.4 –Housing Benefit Regulations 2006, Part 3 –Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006, Part 3

3. Rent restrictions … are not new … –Housing Benefit (General) Regulations 1987, reg.11 –Housing Benefits Regulations 1985, reg.19 –Housing Benefits Regulations 1982, reg.17 –Supplementary Benefits (Requirements) Regulations 1980, reg.21 –Supplementary Benefits Act 1976, Sch.2, para.11 –Supplementary Benefits Act 1966, Sch.2, para.13

4. Rent restrictions … but they are difficult –Five different schemes –Poor legislative drafting –Confusing concepts

5. Rent restrictions … but they are difficult –Five different schemes The “Vanilla” Scheme The Pre-January 1996 Scheme The Pre-April 2008 Scheme The Local Housing Allowance Scheme The Social Sector Scheme –Poor legislative drafting –Confusing concepts

6. Rent restrictions … and difficult –Five different schemes –Poor legislative drafting –Confusing concepts Maximum Rent Eligible Rent Maximum Housing Benefit

7. How entitlement to housing benefit is calculated Maximum HB – 65% x Excess Income Housing Benefit = The resulting sum may be reduced under the benefit cap

8. How entitlement to housing benefit is calculated Eligible Rent – Non-dependant deductions Maximum HB =

9. How entitlement to housing benefit is calculated Eligible Rent In three of the schemes: –the Pre-April 2008 Scheme –the Local Housing Allowance Scheme –the Social Sector Scheme eligible rent is calculated by determining the claimant’s maximum rent and then doing things to it.

10. How entitlement to housing benefit is calculated Eligible Rent In two of the schemes: –the “Vanilla” Scheme –the “Pre-January 1996” Scheme eligible rent is calculated by taking the claimant’s contractual rent and then doing things to it.

11. Key learning point 1 The object of the rent restriction process is to determine the ELIGIBLE rent It is not to determine the maximum rent. Working out the maximum rent is just one step in the process of calculating the eligible rent.

12. Key learning point 2 Maximum housing benefit is not the same thing as maximum rent

13. Key learning point 2 Eligible Rent – Non-dependant deductions Maximum HB =

14. Key learning point 3 The eligible rent may be HIGHER than the maximum rent It may also be lower or the same

15. Eligible rent a “linked person” has died in the previous 12 months (“Protection on death”); the claimant could afford to pay the rent without claiming HB when she first took on the tenancy (“Protection for previous affordability”) transitional protection applies The eligible rent may be HIGHER than the maximum rent if:

16. Eligible rent there are ineligible service charges (except in the social sector) there is mixed residential and commercial use there are joint tenants (in some schemes) a discretionary reduction is made The eligible rent may be LOWER than the maximum rent if:

17. The “Vanilla” Scheme Regulation 12B – Eligible Rent “the aggregate of such payments specified in regulation 12 as [the claimant] is liable to pay” reg.12B(2) Applies when no other Scheme does – reg.12B(1) Starting point is: As the starting point is the contractual rent, no protection applies. Eligible rent is (almost) never higher than the contractual rent.

18. The “Vanilla” Scheme Rent Licence fees Mesne/Violent Profits Payments for use and occupation Service charges Mooring charges etc. Regulation 12 – “Rent” In other words, virtually any payment for occupation of property (except under a long lease) but not any payment to acquire an interest in property

19. The “Vanilla” Scheme Regulation 12B – From “Rent” to “Eligible Rent” deduct payments for ineligible service charges – reg.12B(2) & (5) adjust where the rent is payable in respect of mixed residential/non-residential accommodation – reg.12B(3) apportion to reflect any joint tenancy – reg.12B(4) consider whether to make a further, discretionary, reduction in the “particular case” – reg.12B(6)

20. A suggested approach 1.Do you have the information you need? 2.Which scheme applies? 3.If the pre-April 2008, the social sector or the LHA scheme applies: has the local authority correctly determined the maximum rent? does the eligible rent differ from the maximum rent? 4.If either of the other schemes applies: how much is the contractual rent? does the eligible rent differ from the contractual rent?

21. A walk down memory lane … 13.— Rent (1) The amounts applicable under the preceding paragraphs shall be increased as follows— (a) where the person claiming or in receipt of benefit … is a householder, by the amount of the net rent payable, reduced where appropriate [to reflect non- dependants] or such part of that amount as is reasonable in the circumstances; Supplementary Benefit Act 1966 Schedule 2, Part II (Calculation of Requirements), para.13

22. A walk down memory lane … HB Regulations 1982, reg.17 (Unsuitable accommodation) The local authority “may treat … the eligible rent as being reduced by such amount as it considers appropriate in the circumstances” if it considers that the claimant “occupies a dwelling larger than is reasonably required” or that the rent “is unreasonably high by comparison with the rent payable in respect of similar dwellings occupied under comparable terms in that authority's area”. No reduction could be made where, having regard to various factors, it was not reasonable to expect the claimant to seek alternative cheaper accommodation.

23. A walk down memory lane … HB Regulations 1985, reg.19 (Unsuitable accommodation) Identical to the 1982 Scheme except that: “(4) In relation to a dwelling occupied with security of tenure, other accommodation shall not be treated as suitable alternative accommodation for the purposes of this regulation unless that accommodation will be occupied on terms which will afford security of tenure reasonably equivalent to that under which that dwelling is occupied”

24. The Pre-January 1996 Scheme Originally in HB (General) Regulations 1987, reg.11 (as amended by SI 1989/566 with effect from 1 April 1989) Now in the HB/CTB (CP) Regulations 2006, Sch.3, para.5 Main features are: –If rent is registered or has been set by a rent assessment committee, eligible rent cannot exceed it reg.13(1) and (2) as modified –For the first time, rent officers are involved in setting the eligible rent.

25. The Pre-January 1996 Scheme The role of rent officers LA must consider “by reference to a determination … made by a rent officer … or otherwise” –whether the claimant occupies a dwelling larger than is reasonably required –whether the rent payable is “unreasonably high by comparison with the rent payable in respect of suitable alternative accommodation elsewhere” If so, LA must reduce treat the eligible rent “as reduced by such amount as it considers appropriate having regard in particular to the cost of suitable alternative accommodation elsewhere. reg.13(3) as modified

26. The Pre-January 1996 Scheme However No reduction if household includes a vulnerable person –A person who has reached SPC age –A child or young person for whom claimant/claimant’s partner is responsible –A person who is incapable of work/has limited capability for work unless suitable alternative accommodation “is available” and it is reasonable to expect the claimant to move. reg.13(4) as modified

27. The Pre-January 1996 Scheme Note also 12 months protection on death of a linked person reg.13(5) as modified 13 weeks protection for previous affordability reg.13(3) as modified Deductions for ineligible service charges, adjustment for non-residential use and apportionment for joint liability reg.12 as modified No discretionary reduction in the particular circumstances of the case.

28. The Pre-January 1996 Scheme still applies to Exempt accommodation Exempt claimants HB/CTB (CP) Regulations, Sch.3, para.4

29. The Pre-January 1996 Scheme still applies to Exempt accommodation –a resettlement place under Jobseekers Act 1995, s.30; or –provided by a non-metropolitan county council in England a housing association a registered charity a voluntary organisation HB/CTB (CP) Regulations, Sch.3, para.4(10) where that body or a person acting on its behalf also supplies the claimant with care, support or supervision

30. The Pre-January 1996 Scheme still applies to Exempt claimants –Entitled to HB on 1 January 1996 –Continuously entitled to HB for the same dwelling since that date –Exceptions Original dwelling uninhabitable Non-entitlement to HB for up to four weeks (longer for welfare to work beneficiaries) Earlier claimant was member of present claimant’s household HB/CTB (CP) Regulations, Sch.3, para.4(1)(a) & (3)-(9)

31. The Pre-January 1996 Scheme BUT Exempt claimants lose transitional protection if an event occurs that would cause the LHA scheme to apply to them. HB/CTB (CP) Regs, Sch.3, para.4(2)(a) HB Regs & HB (SPC) Regs, reg.13C(1)(2)(a)-(c) & 5(b)

32. The Pre-January 1996 Scheme HB/CTB (CP) Regulations, Sch.3, para.4(2)(aa) does not apply to exempt claimants who are tenants of local authorities or registered housing associations after 3 March 2014 unless: the claimant or his/her partner are above SPC age; or rent already restricted under the pre-January 1996 scheme before 31 March 2013; or decision made before 31 March 2013 not to restrict the rent under the pre-January 1996 Scheme because of the vulnerable person exceptions

33. The Pre-April 2008 Scheme Originally in HB (General) Regulations 1987, reg.11 (as amended by SI 1995/1644 with effect from 2 January 1996) Now in the HB Regulations and HB (SPC) 2006, regs12C, 13, 13ZA and 13ZB Main features are: –Referral to rent officer in every private sector case –Power to refer housing association tenancies to rent officer –Maximum rent is normally obtained by subjecting rent officer determinations to a mathematical formula.

34. The Pre-April 2008 Scheme Rent officer determinations Set out in the Rent Officers (Housing Benefit Functions) Order 1997 and the Rent Officers (Housing Benefit Functions) (Scotland) Order 1997 1.Significantly high rent determination (SHR) 2.Size-related rent determination (SizeRR) 3.Exceptionally high rent determination (EHR) 4.Local reference rent determination (LRR) 5.Single room rent determination (SRR) 6.Claim-related rent determination (CRR)

35. The Pre-April 2008 Scheme Maximum Rent The CRR is the lowest of –the SHR, –the SizeRR –the EHR –the contractual rent Maximum rent is the lowest of –the CRR –the LRR –the Size RR (if applicable) –There are special rules where rent includes meals and a substantial part of the rent relates to board and attendance - HB Regs and HB (SPC) Regs, reg.13

36. The Pre-April 2008 Scheme Maximum Rent However, reg.13 is subject to Reg.13ZA – Protection on death and 13 week protection Reg.13ZB – Change in “reckonable rent”

37. The Pre-April 2008 Scheme Maximum Rent Reg.13ZA – Protection on death –where claimant occupies a dwelling that is the same as occupied at the death of a linked person, the maximum rent is either: the maximum rent which applied before the death occurred; or the reckonable rent –Linked person and reckonable rent are defined by reg.2(1) –Protection lasts for 12 months - HB Regs and HB (SPC) Regs, reg.13ZA(1) & (2)

38. The Pre-April 2008 Scheme Maximum Rent Reg.13ZA – 13 week protection –where claimant or a linked person “was able to meet the financial commitments for his dwelling when they were entered into, there shall be no maximum rent during the first 13 weeks of the claimant’s award of housing benefit” –does not apply where claimant or partner were entitled to HB in the past 52 weeks - HB Regs and HB (SPC) Regs, reg.13ZA(3) & (4)

39. The Pre-April 2008 Scheme Maximum Rent Reg.13ZB – Change in reckonable rent Where a maximum rent has been set under regs.13 or 13ZA and the reckonable rent is reduced to a figure below the maximum rent, the maximum rent is reduced to an amount equal to the reduced reckonable rent. - HB Regs and HB (SPC) Regs, reg.13ZA(1)

40. The Pre-April 2008 Scheme Eligible Rent Eligible Rent is maximum rent subject to: adjustment for non-residential accommodation apportionment for joint tenants (except where the SRR applies) discretionary reduction but no deduction for ineligible service charges because already taken into account by rent officer regs.12C and 12B

41. The Pre-April 2008 Scheme Still applies where the pre-January 1996 Scheme, the LHA Scheme and the Social Sector Scheme don’t regs.13(1) and 14

42. The LHA Scheme HB Regulations and HB (SPC) 2006, regs12D, 13C, and 13D Main features are: –Individual cases are no longer referred to the rent officer –Rent officers issue generic determinations for prescribed categories of accommodation within a “broad rental market area” (BRMA) –Regulations specify which category of accommodation applies to the claimant –The “maximum rent (LHA)” is the figure determined by the rent officer for that category of dwelling in that area unless the “cap rent” is lower. –That’s it.

43. The LHA Scheme Applies where local authority receives new claim for a rent allowance on or after 7 April 2008 - regs.13C(1) & (2)(a)-(b) notification of a change of dwelling on or after 7 April 2008 where HB not previously calculated under the LHA scheme (or the former “Pathfinder” scheme) - regs.13C(1) & (2)(a)-(b) BUT....

44. The LHA Scheme Does not apply to social sector tenancies - reg.13C(5)(a) exempt accommodation within the pre-January 1996 Scheme (but it does apply to exempt claimants) - reg.13C(5)(b) certain excluded tenancies - reg.13C(5)(c) & Sch.2, paras.4-11 payments for accommodation in houseboats, caravans. mobile homes and hostels - reg.13C(5)(d) some tenancies where rent is attributable to board and attendance - reg.13C(5)(e)

45. The LHA Scheme Where the LHA scheme already applies, a new maximum rent (LHA) is determined when the local authority receives –notification of a change that affects the applicable category of dwelling - reg.13C(2)(d)(i) –notification of the death of a linked person that does not affect the applicable category of dwelling - reg.13C(2)(d)(ii) –notification of a change of dwelling - reg.13C(2)(d)(iii) –notification of a change in the “cap rent” - reg.13C(2)(d)(i) and on 1 April each year - reg.13C(3)

46. The LHA Scheme How many rooms do you get? “Young individuals” – basically single under 35s with no children but check the definition in reg.2(1) – with no non-dependants and no SDP get the “one bedroom shared accommodation” rate. - reg.13D(2)(a) Couples (and single claimants who are not restricted to shared accommodation) and who in fact have the exclusive use of two or more rooms or one room with a bathroom, toilet and kitchen or facilities for cooking) get the “one bedroom self-contained accommodation” rate - reg.13D(2)(b)

47. The LHA Scheme How many rooms do you get? Everyone else gets one bedroom for each of the following: –a couple –a person who is not a child –a child who cannot share a bedroom (but only if there is such a bedroom) –two children of the same sex –two children who are less than 10 years old –a child - reg.13D(3)(c) From 1 April 2011, the maximum number of bedrooms has been 4. Some claimants have transitional protection from this change: see reg.12M

48. The LHA Scheme How many rooms do you get? An additional bedroom is allowed if the claimant or his/her partner is –a “person who requires overnight care” –a “qualifying parent or carer” - reg.13D(3A) Where both those conditions are satisfied, two extra bedrooms are allowed - reg.13D(3B) These additional rooms are not subject to the four bedroom limit.

49. The LHA Scheme Eligible rent Take the maximum rent (LHA) Increase it for protection on death (if appropriate) - reg.12D(3) Increase it for protection for previous affordability (if appropriate) - reg.12D(5) No separate deduction for ineligible service charges. Combined rent and service charges are only eligible for HB up to the level of the maximum rent (LHA) Adjustment for non-residential use, apportionment for joint tenants and the discretionary reduction have been taken into account in the determination of the maximum rent (LHA) via the “cap rent”

50. The Social Sector Scheme aka the “bedroom tax” HB Regs, regs.12BA, A13 and B13 Not in the HB (SPC) Regs, so doesn’t apply to claimants who have (or whose partners have) reached SPC age. - See also HB Regs, reg.A13(2)(d) Main features are –Social sector tenancies only –Maximum rent (social sector) depends on the number of “bedrooms” in the dwelling. –14% reduction for one “spare” bedroom. 25% for two or more “spare” bedrooms.

51. The Social Sector Scheme Maximum rent (social sector) Seven stages Begin by taking the contractual rent less ineligible service charges Decide how many “bedrooms” there are in the dwelling 3.Work out how many “bedrooms” the claimant is entitled to 4.If the Stage 2 figure exceeds the Stage 3 figure by one, reduce the Stage 1 figure at 1 by 14% 5.If the Stage 2 figure exceeds the Stage 3 figure by two or more, reduce the Stage 1 figure at 1 by 25% 6.Apportion for joint tenants 7.Consider whether to make a further discretionary reduction - HB Regs, reg.B13(2)-(4)

52. The Social Sector Scheme How many bedrooms do you get? The claimant gets one bedroom for each of the following: –a couple –a person who is not a child –a child who cannot share a bedroom –two children of the same sex –two children who are less than 10 years old –a child –a “person who requires overnight care” –a “qualifying parent or carer” - HB Regs, reg.B13(5)-(6)

53. The Social Sector Scheme How many bedrooms do you get? Note that unlike the LHA scheme, there is no four-bedroom limit “members of the armed forces away on operations” are treated as still occupying the dwelling (and therefore entitled to a bedroom) in certain circumstances - HB Regs, reg.B13(8)

54. The Social Sector Scheme So what is a “bedroom”? You will usually know what a bedroom is In particular, if it has a bed in it and a member of the household was in the habit of sleeping in that bed during the period you are considering, then the room is almost certainly a bedroom. However, there are sometimes genuine disputes.

55. The Social Sector Scheme So what is a “bedroom”? The correct approach is explained by the Three- Judge Panel of the Upper Tribunal in SSWP v Nelson and Fife Council [2014] UKUT 0525 (AAC): –the test should not be re-written or paraphrased –the word should be construed and applied in its context having regard to the underlying purposes of the legislation –the underlying purpose of reg.B13 is to limit the HB entitlement of those under-occupying accommodation and the trigger for a reduction is set by reference to the entitlement of a tenant to bedrooms for the listed people

56. The Social Sector Scheme So what is a “bedroom”? The correct approach is explained by the Three- Judge Panel of the Upper Tribunal in SSWP v Nelson and Fife Council [2014] UKUT 0525 (AAC): –the use or potential use of the rooms can be by any of those people –therefore it has to be considered whether the room could be used by any of those people –designation or choices made by the family as to who should occupy rooms as bedrooms or how rooms should be used is unlikely to affect the application of the regulation

57. The Social Sector Scheme So what is a “bedroom”? The correct approach is explained by the Three- Judge Panel of the Upper Tribunal in SSWP v Nelson and Fife Council [2014] UKUT 0525 (AAC): –the fact that the test focuses on whether the room could be used as a bedroom by any of the listed people means it is an assessment of the property when vacant rather than how it is being used from time to time –a starting point is the landlord’s description of the property –relevant factors include the size, configuration and overall dimensions of the room, access, natural and electric light, ventilation and privacy

58. The Social Sector Scheme What are we to make of Nelson? The space standards in Housing Act 1985, ss.326- 327 and Housing Scotland Act 1987, s.137 are not relevant to reg.B13 Whether a room is a “bedroom” or not is a question of fact and degree to be judged having regard to the underlying purposes of the regulation

59. The Social Sector Scheme Discrimination arguments Reg.B13 has been held not to be unlawfully discriminatory. This is because the social sector scheme has to be read in the light of availability of discretionary housing payments (DHPs) See: –R (MA and others) v Secretary of State for Work and Pensions [2014] EWCA Civ 13 –R (Cotton & Others) v Secretary of State for Work and Pensions and Others [2014] EWHC 3437 (Admin) –R (Rutherford) v Secretary of State for Work and Pensions & Pembrokeshire County Council [2014] EWHC 1613 (Admin) –R (A) v Secretary of State for Work and Pensions [2015] EWHC 159 (Admin)

60. The Social Sector Scheme Discrimination arguments See also –R (SG (previously JS) and others) v Secretary of State for Work and Pensions [2015] UKSC 16 –Burnip, Trengrove and Gorry v Secretary of State for Work and Pensions [2012] EWCA Civ 629 The Supreme Court has given permission to appeal in MA and others. The hearing is listed for March 2016. However, there is one potential discrimination challenge to reg.B13 that has yet to be decided at any level...

61. The Social Sector Scheme Eligible rent Take the maximum rent (social sector) Increase it for protection on death (if appropriate) - reg.12BA(3) Increase it for protection for previous affordability (if appropriate) - reg.12BA(6) No deduction for ineligible service charges because a deduction was made at Stage 1 of the maximum rent (social sector) calculation Apportionment between joint tenants and any discretionary reduction were made at Stage 6 and Stage 7 of the maximum rent (social sector) calculation There is no adjustment for non-residential accommodation. Social sector accommodation is not mixed.

62. Rent restrictions Why are they anything to do with us? Under CSPSSA 2000, Sch.7, para.6(2)(c), there is no right of appeal against: “(c)so much of any decision of a relevant authority as adopts a decision of a rent officer under any order made by virtue of section 122 of the Housing Act 1996 (decisions of rent officers for the purposes of housing benefit)” LB Bexley v LD (HB) [2010] UKUT 79 (AAC) SK v South Hams DC (HB) [2010] UKUT 129 (AAC)

63. A suggested approach 1.Do you have the information you need? 2.Which scheme applies? 3.If the pre-April 2008, the social sector or the LHA scheme applies: has the local authority correctly determined the maximum rent? does the eligible rent differ from the maximum rent? 4.If either of the other schemes applies: how much is the contractual rent? does the eligible rent differ from the contractual rent?

64. A suggested approach 1.Do you have the information you need? Age Landlord Tenancy Benefit history

65. 1.Do you have the information you need? Age –How old is the claimant? –How old is the claimant’s partner? A suggested approach

66. 1.Do you have the information you need? Landlord –Who is the claimant’s landlord? –What is his/her/its legal status? –(Is the rent paid directly to the landlord?) A suggested approach

67. 1.Do you have the information you need? Tenancy history –When did the tenancy/first tenancy of the property begin? –Note that the tenancy may have begun before the claimant was the tenant. A suggested approach

68. 1.Do you have the information you need? Benefit History –From what date has the claimant been continuously entitled to HB? A suggested approach

69. Dates to watch out for 15 January 1989 1 January 1996 7 April 2008 1 April 2011 1 April 2013 3 March 2014 Tenancy before this date may be an “excluded tenancy” Pre-January 1996 scheme may apply Pre-April 2008 scheme may apply Important transitional protection may apply in former “Pathfinder” areas. Important transitional protection applies to some LHA claims “Bedroom tax” applies to most working age social sector claims