What have the Courts said about using benefits to make up a rent shortfall?

The case:

Last week saw the Supreme Court hand down judgement in the case of Samuels v Birmingham [2019] UKSC 28. This case was about whether a local authority is entitled to treat someone as intentionally homeless on the basis that part of their income from benefits was available to meet the shortfall between the rent due and the housing benefit in payment.

In this case, the tenant’s income consisted solely of benefits. Housing Benefit did not cover all of the rent due, leaving a shortfall each month that she could not afford.

She was later evicted for rent arrears and after approaching the council as homeless, she was found to be intentionally homeless by Birmingham City Council on the basis that she could have afforded to pay the shortfall each month by using her benefit income. On review, Birmingham considered that she had sufficient “flexibility” to be able to meet the shortfall using her benefit income.

Supreme Court judgement

The Supreme Court unanimously found that this was the wrong approach:

“[T]he question was not whether, faced with that shortfall, she could somehow manage her finances to bridge the gap; but what were her reasonable living expenses (other than rent), that being determined having regard to both her needs and those of the children”.

Analysis of the judgement

The judgement is extremely helpful for practitioners assisting homeless applicants as it provides clear guidance to local authorities on the correct approach to take when assessing what is affordable.

More importantly, the judgement recognises that benefits are designed to meet a basic standard of living and not to meet the shortfall between rent and Housing Benefit. It is hoped that the lasting effect of this judgement will be that people will no longer be deemed to be intentionally homeless if they use their benefits for the intended purposes of daily living and that it will remove the poverty inflicted upon those in such a position.

The other consequences of this judgement are:

• If a tenant is living in a property that is unaffordable due to the shortfall between the rent due and the Housing Benefit in payment, they could apply to their council for assistance to prevent homelessness before they start to accrue rent arrears. This will be of particular assistance to someone who has had a change in their income, perhaps they’ve lost their job and cannot afford their rent after claiming benefits, or their partner has left them and they have had to stay at home with the children and claim benefits, for example.
• Once a council has accepted a duty to provide accommodation to a homeless applicant, any such accommodation must be affordable. In light of this judgement, it may mean that accommodation in the private sector, particularly in London, is even further out of reach for applicants. How this will be addressed is unclear.

It is likely that there will be further guidance provided by the Ministry of Housing very soon.