Landmark ruling could lead to housing benefit gap for tenants

A landmark ruling has provoked questions over the high rents charged by some providers, reports Simeon Brody

The decision by East Riding of Yorkshire Council to cut the housing benefit of 19 people with learning difficulties looks to be the first knock-on effect of a landmark social security judgment.

The council has restricted payment of the benefit to the level of the average room rent in the area, while it considers the implications of the judgment made by social security commissioner Charles Turnbull in June. The restriction means some of the residents now receive benefit equivalent to just a quarter of their rent, making them liable for eviction.

The residents are living in housing association properties with support provided by a separate agency, in a similar arrangement to the case considered by Turnbull. Since the advent of Supporting People it is common for housing and support
to be provided by different bodies, meaning the case could also have implications for thousands of other people.

The Turnbull judgment centred on housing benefit regulations which say people living in accommodation where the provider also offers support are exempt from the general rule limiting housing benefit to market rent levels.

Three men with learning difficulties were being charged £238 a week rent by landlord Rivendell Lake Housing Association for a
room in a shared house in Sheffield, when the local market rent for a room was just £45. The figure did not include support costs, which were funded separately by Sheffield Council.

Turnbull decided the market rent exemption should not apply in this case because the support was not provided by Rivendell but by a third party, Citizenship First. Rivendell argued that the support was provided on its behalf but Turnbull disagreed,
saying it was Sheffield Council, not Rivendell, which had the meaningful contract with Citizenship First as it funded the support.

The property in question was bought by Supported Living Limited and leased on a 30-year-deal to Rivendell – a common arrangement among learning difficulties providers.

While registered social landlords have their rent levels governed by the Housing Corporation, non-registered associations such as Rivendell are free to set their own levels.

The relatively high levels of rent involved are needed to cover the mortgage taken out to buy the property. The tenants benefit from supported housing but the organisation taking out the mortgage also benefits, getting to own the property outright at the end of the deal.

One source from the learning difficulties field, who does not wish to be named, says that in its most extreme form this practice can leave tenants reliant on the benefit departments’ willingness to meet unsustainable rent levels.

The source says some companies buy properties on mortgages as short as 10 years and expect housing benefit to meet the cost and questions whether rent levels will be reduced once the mortgage is paid off.

Chris Hampson, director of strategy and service delivery at registered supported housing provider Look Ahead, says any association negotiating a mortgage deal should make sure the repayments are within what housing benefit officers are prepared to pay.

But Rivendell director Tony Leatherbarrow insists the Turnbull case was about who was providing the support. He says rents were high because the house was a detached bungalow in a good part of Sheffield that Supported Living Limited bought on a 100 per cent mortgage.

Rivendell also had to borrow money to furnish the property and provide intensive housing management. He also says that the  house was built on a 25-year mortgage and emphasises that Rivendell offers its tenants full assured tenancies, meaning they have a right to remain in the property as long as they wish.

He adds that the supported accommodation provided by organisations such as Rivendell is still far cheaper for the tax payer than residential care.

IMPLICATIONS
Mencap’s contract manager for housing and support, Lynda Rowbotham, says housing benefit has been invaluable in helping people with learning difficulties live in the community. But the judgment has cast a “shadow” over much of this work.
The Department for Work and Pensions says it will issue guidance after the conclusion of two outstanding cases.

Contact the author
 simeon.brody@rbi.co.uk