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	UK Social Security and Child Support Commissioners' Decisions
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[2008] UKSSCSC CH_3590_2007 (09 July 2008)

 


Decision

1. This appeal by the City and County of Swansea ('Swansea') succeeds. The decision of Swansea appeal tribunal given under reference 204/07/01134 on 20 June 2007 is wrong in law. I set it aside and, under paragraph 8(5)(a) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000, I substitute the decision that the tribunal should have given, namely:

The claimant's appeal does not succeed.

The decision of the City and County of Swansea issued on 27 March 2007 is confirmed.

There are no grounds upon which to supersede the decision dated 11 December 2006 awarding the claimant housing benefit from and including 1 May 2006 at the rates specified in that decision.

Reasons

Introduction

2. This is an appeal by the City and County of Swansea ('Swansea'). It is brought with the leave of Mr Commissioner Rowland. It raises a short point about the duty of a local authority to make a new referral to a rent officer when a private landlord increases the claimant's rent. Although technical in nature, the point is important because—at least before April 2008—for most private tenants could only have their housing benefit increased to take account of an increase in their rent if the rent officer issues a fresh determination. That, in turn, is not possible unless the case is referred to the rent officer by the local authority.

The facts

3. The facts of the case are not in dispute. On 22 November 2001, the claimant took a six month assured shorthold tenancy of a property in Swansea at a rent of £250 per calendar month. He has continued to live there ever since. Although the agreement does not contain an express term allowing the landlord to increase the rent, it increased by consent to £300 pcm from 22 April 2004. Subsequently—the papers do not say when—the claimant applied to Swansea for housing benefit. Swansea referred the case to the rent officer on 4 December 2006 and, on 6 December, the rent officer issued the following decision:

'NOTIFICATION OF RENT OFFICER DECISION

…

Referred Rent: £300.00 per calendar month

Rent Officer Valuation £242.67

Claim Related Rent £242.67

Reasons for Decision:

Housing benefit does not cover the cost of fuel, water charges and other costs (like laundry or cleaning of rooms) which may be included in the rent. These items are called "ineligible charges".

Housing Benefit will not pay for the Fuel for hot water, Fuel for space/central heating, Fuel for cooking and Fuel for lighting included in the rent and I have valued this at £34.67.

Having deducted the ineligible charges, I have decided that the rent payable is more than the landlord could reasonably expect to get from a tenant not on Housing Benefit. I have done this by comparing the rent with details of other rents for similar homes. A reasonable rent is £242.67.'

On 11 December 2006, Swansea awarded the claimant housing benefit at the weekly rate of £52.37 with effect from 1 May 2005.

4. On 20 February 2007, the landlord's agents wrote to the claimant increasing the rent to £340.00 pcm from 22 April 2007. Swansea was given notice of that increase on 28 February 2007. On 27 March 2007, Swansea notified the claimant that it was unable to refer the increased rent to the rent officer until 12 months had expired from the previous referral and that his housing benefit would therefore remain unchanged.

The tribunal's decision

5. The claimant appealed against that decision on 20 April 2007 and, on 20 June 2007, the tribunal allowed that appeal. The chairman gave the following reasons:

'3. The normal 52 week rule could be displaced on the facts of this case if … paragraph 2(3)(c) of Schedule 2 to the 2006 Regulations applied. The tribunal took the view that the appellant occupied the property by virtue of a monthly periodic assured shorthold tenancy. This had arisen after the fixed term granted in November 2001 had come to an end. This clearly comes within the definition of tenancy contained in reg 14(10). The rent under a monthly periodic assured shorthold can …be increased in the same way as for an assured tenancy. The process is set out in section 13 Housing Act 1988. Effectively, the rent can be increased once a year in the case of a tenancy of the kind held by the appellant. The last such increase before that in April 2007 was in April 2004.

4. The process set out in section 13 Housing Act is a term of the appellant's tenancy: if it was not the rent could not be increased. The absence of any express rent increase provision in the tenancy dated 22/11/2001 does not … mean that the appellant cannot [take] advantage of paragraph 2(3)(c). The word "term" does not distinguish between express and implied terms. If that had been intended the tribunal would have expected some reference to an express term but there is no such reference. …'

The tribunal went on to say that its decision would not allow landlords to avoid rent restrictions by making regular increases because, by virtue of section 13(2) of the Housing Act 1988, that section cannot be used to increase the rent more than once a year. The tribunal also noted that whether or not the agent's letter amounted to a valid notice under section 13 had not been raised before it.

The law

6. The claimant was born in 1942. At the time I have to consider he was over 60. Until 5 March 2006, his claim for housing benefit fell to be determined under the Housing Benefit (General) Regulations 1987 as modified by the Housing Benefit and Council Tax Benefit (State Pension Credit) Regulations 2003. Since 6 March 2006, it has been subject to the Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006 ('the Regulations'), which consolidated the previous law. I will refer to the consolidated law.
7. Under that law, the requirement to refer to a rent officer can be found in regulation 14, the relevant parts of which are in the following terms:

'Requirement to refer to rent officers

14.—(1) Subject to the following provisions of this regulation, a relevant authority shall apply to a rent officer for a determination to be made in pursuance of the Housing Act functions where—

(a) it has received a claim on which rent allowance may be awarded; or

(b) it has received relevant information regarding a claim on which rent allowance may be awarded; or

(c) it has received a notification of a change relating to a rent allowance; or

(d)-(e) …

(f) 52 weeks have elapsed since it last made an application under sub-paragraph (a), (b), (c), (d) or (e) above in relation to the claim or award in question; or

(g) 52 weeks have elapsed since—

(i) an application was made under sub-paragraph (f) above; or

(ii) an application was made under this sub-paragraph,

whichever last occurred.

(2)-(3) …

(4) An application shall not be required under paragraph (1) where a claim, relevant information regarding a claim, notification or request relates to either—

(a) …

(b) an "excluded tenancy" within the meaning of Schedule 2 (excluded tenancies).

(5) …

(6)-(9) …

(10) In this regulation—

…

"change relating to a rent allowance" means a change or increase to which paragraph 2(3)(a), (b), (c) or (d) of Schedule 2 applies;

…

"relevant information" means information or evidence forwarded to the relevant authority by an appropriate DWP office regarding a claim on which rent allowance may be awarded, which completes the transfer of all information or evidence held by the appropriate DWP office relating to that claim;

"tenancy" includes—

(i) in Scotland, any other right of occupancy; and

(ii) in any other case, a licence to occupy premises,

and reference to a tenant, landlord or any other expression appropriate to a tenancy shall be construed accordingly;

…

8. Regulation 14(4)(b) refers to Schedule 2 to the Regulations which, again so far as is relevant, reads as follows:

'SCHEDULE 2

Regulation 14

Excluded tenancies

1. An excluded tenancy is any tenancy to which any of the following paragraphs applies.

2.—(1) Subject to sub-paragraphs (2) to (3), where a rent officer has made a determination, which relates to the tenancy in question or any other tenancy of the same dwelling this paragraph applies to—

(a) the tenancy in respect of which that determination was made; and

(b) any other tenancy of the same dwelling on terms which are substantially the same, other than the term relating to the amount of rent, as those terms were at the time of that determination or, if earlier, at the end of the tenancy.

(2) For the purposes of any claim, notification, request or application under regulation 14(1) ("the later application"), a tenancy shall not be an excluded tenancy by virtue of sub-paragraph (1) by reference to a rent officer's determination made in consequence of an earlier claim, notification, request or application ("the earlier application") where—

(a) the earlier and later applications were made in respect of the same claimant or different claimants; and

(b) the earlier application was made more than 52 weeks before the later application was made.

(3) Sub-paragraph (1) shall not apply where subsequent to the making of the determination mentioned in that sub-paragraph—

(a)-(b) …

(c) there has been a rent increase under a term of the tenancy and the term under which that increase was made was either included in the tenancy at the time when the application for that determination was made (or was a term substantially the same as such a term) and that determination was not made under paragraph 1(2), 2(2) or 3(3) of Schedule 1 to the Rent Officers Order;

(d)-(e) …

3-11 …

12. In this Schedule, "rent" shall be construed in accordance with paragraph (10) of regulation 14 (interpretation of "tenancy" and other expressions appropriate to a tenancy) and, subject to that sub-paragraph, has the same meaning—

(a) in Scotland, …

(b) in any other case, as in section 14 of the Housing Act 1988, except that the reference to the dwelling-house in subsection (4) shall be construed as a reference to the dwelling,

(c) and—

(i) other expressions have the same meaning as in regulation 14(10);

(ii) '

9. The tribunal refers to section 13 of the Housing Act 1988. That section is in the following terms:

'Increases of rent under assured periodic tenancies.

13.—(1) This section applies to—

(a) a statutory periodic tenancy other than one which, by virtue of paragraph 11 or paragraph 12 in Part I of Schedule 1 to this Act, cannot for the time being be an assured tenancy; and

(b) any other periodic tenancy which is an assured tenancy, other than one in relation to which there is a provision, for the time being binding on the tenant, under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period.

(2) For the purpose of securing an increase in the rent under a tenancy to which this section applies, the landlord may serve on the tenant a notice in the prescribed form proposing a new rent to take effect at the beginning of a new period of the tenancy specified in the notice, being a period beginning not earlier than—

(a) the minimum period after the date of the service of the notice; and

(b) except in the case of a statutory periodic tenancy—

(i) in the case of an assured agricultural occupancy, the first anniversary of the date on which the first period of the tenancy began;

(ii) in any other case, on the date that falls 52 weeks after the date on which the first period of the tenancy began; and

(c) if the rent under the tenancy has previously been increased by virtue of a notice under this subsection or a determination under section 14 below—

(i) in the case of an assured agricultural occupancy, the first anniversary of the date on which the increased rent took effect;

(ii) in any other case, the appropriate date.

(3) The minimum period referred to in subsection (2) above is—

(a) in the case of a yearly tenancy, six months;

(b) in the case of a tenancy where the period is less than a month, one month; and

(c) in any other case, a period equal to the period of the tenancy.

(3A) The appropriate date referred to in subsection (2)(c)(ii) above is—

(a) in a case to which subsection (3B) below applies, the date that falls 53 weeks after the date on which the increased rent took effect;

(b) in any other case, the date that falls 52 weeks after the date on which the increased rent took effect.

(3B) …

(4) Where a notice is served under subsection (2) above, a new rent specified in the notice shall take effect as mentioned in the notice unless, before the beginning of the new period specified in the notice,—

(a) the tenant by an application in the prescribed form refers the notice to a rent assessment committee; or

(b) the landlord and the tenant agree on a variation of the rent which is different from that proposed in the notice or agree that the rent should not be varied.

(5) Nothing in this section (or in section 14 below) affects the right of the landlord and the tenant under an assured tenancy to vary by agreement any term of the tenancy (including a term relating to rent).'

Reasons for the Commissioner's decision

10. The tribunal's decision was an ingenious attempt to do justice in a hard case. I share the tribunal's evident sympathy for the predicament in which the claimant finds himself. Under Swansea's decision, he finds himself liable to meet a significant part of his rent from his own restricted resources, solely because—through no fault of his own—the relative timings of his claim for benefit and his landlord's decision to increase the rent were not to his advantage. I have no doubt, however, that Swansea's decision is the one that it was required by law to give and I have therefore set the tribunal's decision aside and substituted my own decision to the same effect as Swansea's.
11. I agree with much of what the tribunal says in the passage quoted at paragraph 5 above. In particular, I agree that the "term" referred to in paragraph 2(3)(c) of Schedule 2, can be implied and need not be express. Where I differ with the tribunal is over whether section 13 operates by implying such a term. In my judgment it does not. I have quoted the section at paragraph 9 and it will be seen that nothing in its wording seeks to imply any term into the tenancy agreement. Rather it operates by establishing a free-standing statutory procedure under which a landlord may increase the rent payable under the tenancy even though it does not contain a term that would allow her to do so on a contractual basis. The tribunal was not correct to say that the rent could not be increased unless the process set out in section 13 was a term of the appellant's tenancy. The legal basis for the increased rent is section 13(4). Where it applies, that subsection imposes the increase in the rent as a matter of statute law and does not require contractual authority, whether express or implied, to do so.
12. Section 13(1)(b) is important in this context. It says that where a tenancy includes a contractual rent increase or review clause ('a provision … under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period') section 13 does not apply to assured periodic tenancies such as the tenancy in this case. In my judgment, that is conclusive against the interpretation adopted by the tribunal because it leads to a formal absurdity. Like paragraph 2(3)(c), section 13(1)(b) does not say that the 'provision' has to be express. By the tribunal's own reasoning (with which I agree) that 'provision' may therefore be implied. But, on that basis, if section 13 operates by implying a rent increase term into the tenancy then any assured periodic tenancy to which section 13 applies becomes a tenancy that includes a provision … under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period with the consequence that section 13 does not apply. Since it is impossible that section 13 could both apply and not apply to the same tenancy at the same time, it must follow that it operates other than by implying a term into the tenancy agreement.
13. Moreover, I am not persuaded that the tribunal was entitled to refuse to deal with the question whether the agents' letter was a valid notice under section 13. Had it done so, I think it probable that it would have concluded that it was not, and did not purport to be, such a notice. The consequence would have been that the rent increase took effect, if at all as an informal agreed variation of the tenancy (i.e., as permitted by section 13(5)). That conclusion might have affected the tribunal's approach to paragraph 2(3)(c) of Schedule 2. CH/1556/2006 is authority that it is important for tribunals to establish the correct legal basis for an increase in rent before going on to consider whether the local authority is under a duty to refer that increase to the rent officer.
14. Finally, there is an additional problem that the tribunal did not address. Even if—contrary to what I have held—section 13 operated by implying a term into the tenancy agreement, paragraph 2(3)(c) still only applies where the previous determination 'was not made under paragraph 1(2), 2(2) or 3(3) of Schedule 1 to' the Rent Officers (Housing Benefit Functions) Order 1997 ('the Order'). Those paragraphs of Schedule 1 to the Order refer respectively to a 'significantly high rent determination', a 'size and rent determination' and an 'exceptionally high rent determination'. The point of the rule is that, where such a determination has been made, the amount of housing benefit does not depend upon the contractual rent but on the amount determined by the rent officer; it is therefore irrelevant that the contractual rent has subsequently been increased.
15. In this case, the rent officer must have made at least one of those determinations. After deduction of ineligible charges, the contractual rent was £265.33 (£300 - £34.67). and there is no other way in which the claim-related rent could have been further reduced to £242.67. The rent officer's letter of notification is a paraphrase of Schedule 1 to the Order but the reference to the rent payable's being 'more than the landlord could reasonably expect to get 'by comparison with 'other rents for similar homes' strongly suggests a significantly high rent determination. If that is correct, then paragraph 2(3)(c) cannot apply. The tribunal should therefore have investigated further and made appropriate findings of fact.

Conclusion

16. To summarise:

(a) the rent increase notified to Swansea on 28 February 2007 was not one to which paragraph 2(3)(a)-(d) of Schedule 2 applied and was therefore not notification of a 'change relating to a rent allowance' within regulation 14(1)(c) (see the definition of that phrase in regulation 14(10)). Therefore Swansea was not obliged to apply to a rent officer for a determination by regulation 14(1);

(b) the claimant's tenancy was in any event an excluded tenancy by virtue of paragraphs 2(1)(a) and (2)(b) of Schedule 2 and any obligation under regulation 14(1) was therefore excluded by regulation 14(4);

(c) Swansea has no power to apply to a rent officer for a determination in circumstances where it is not required to do so;

(d) therefore Swansea's refusal to apply to the rent officer was correct and there were no grounds on which to supersede the original decision to award the claimant housing benefit.

17. My decision is therefore as set out at paragraph 1 above.

(Signed on the original)

Richard Poynter Deputy Commissioner 9 July 2008