IS IT CONTRIVED OR NOT?

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  • #22756
    paul_edmund
    Participant

    The following may be a scheme that some of your authorities are involved in, even if not I would welcome comments on the following.

    I recently attended a presentation where Lloyds TSB / Orchard & Shipman will be operating a PSL scheme. They will be purchasing properties and then offering them to us as a council on a 10 year lease. The target client group will be homeless applicants and the rents will be set a a level that does not exceed our homeless threshold of £184.23 per week (this is very much deliberate and has been clearly stated rents will be set at that level).

    All fine in theory you say, I then come to the bit that makes me step back and think a bit.

    The literature talks very much about HB funding the purchase of these properties and therefore by default only individuals claiming HB will have access to these properties. Apparently this is being done in agreement with the DWP, I am yet to seek their opinion on that.

    My immediate thought springs to HBR 9(1)(l), liability created to take advantage. The scheme itself is well intentioned and even has the support of Senior Managers, however benefits as we know does not always follow the path of common sense and assisting in reducing homelessness.

    I am currently going to be advising because the intention is that only those on HB can occupy these properties and the intention that HB funds the scheme means any claims should be disallowed.

    I would be interested hearing from any authorities that are considering this scheme or in general peoples thoughts on this matter.

    #9437
    aosulliv
    Participant

    So the person who makes the claim for HB will be the owner of the property outright after 10 years?

    #9438
    Kevin D
    Participant

    Hi Paul,

    Without all of the background info, it’s a difficult call to make on any individual case. However, I have no doubt that the scheme is capable of falling foul of HBR 9(1)(l).

    What happens if a clmt is not (otherwise) entitled to HB? Is it envisaged (by, probably, the L/L), that ONLY HB tenants will be allowed tenancies, is the targeting aimed at a class, or group, of tenants only? (it appears so) What if a prospective tenant could afford the rent without HB (unlikely, but not inconceivable if, say, a tenant had resources from a trust fund for example)?

    However, even if your enquiries show that the scheme probably isn’t going to fall foul of HBR 9(1)(l), I’d strongly advise against offering a view to the L/L – reasons per other threads.

    Out of curiousity, what is the justification of the high level of rent? (assuming this is high for your area).

    This whole area of HB is becoming a mess – for ALL parties. Time for the DWP to grasp the nettle and deal with it properly, so that everyone knows where they stand and don’t have to worry about the uncertainty that HB rules give rise to. This is irrespective of any view on the motives of any landlord in these, or other, cases.

    Regards

    #9439
    gerryg
    Participant

    Another thought following on from what Kevin said about affording the rent.

    If a claimant got a job and no longer needed to claim HB would the landlord evict them? Would a clause in tenancy to that effect make it non-commercial?

    #9440
    paul_edmund
    Participant

    Hi, just to clarify from the replies received.

    After 10 years the property the local authority or partner RSL (if used) take over ownership of the property.

    Other interesting facts came from the briefing, where the persons for arguments sake goes back to work the rent will be reduced or even in an even more interesting move substituted with another property the council have – you then move the person who has dared gone back to work and the put another homeless person in.

    Why you may ask – well the rent needs to be kept at the highest amount possible to clear the debt against it as quickly as possible.

    #9441
    Kevin D
    Participant

    Gerry’s post indirectly gave rise to another question….

    Who chooses the the tenant (i.e. the final, bottom line, say)? Social Services (or other independent professional)? Or a party with a vested interest (such as the L/L, or a financial stakeholder).

    Regards

    #9442
    gerryg
    Participant

    Pauly says

    [quote:005a69d742]Other interesting facts came from the briefing, where the persons for arguments sake goes back to work the rent will be reduced or even in an even more interesting move substituted with another property the council have – you then move the person who has dared gone back to work and the put another homeless person in.[/quote:005a69d742]

    That surely points to it being contrived. You can’t charge a tenant on HB more than one who isn’t. Wasn’t there a case about that?

    #9443
    paul_edmund
    Participant

    The local authority i.e. us have full nomination rights, which some ways is worse as in we will only be selecting individuals on benefit or that will be the selection criteria used.

    #9444
    Kevin D
    Participant

    Gerry,

    I suspect you’re thinking of [b:ba316c87e8]Baragrove[/b:ba316c87e8]. I have a suspicion Paul is well aware of that case… 😕 .

    Pauly,

    For what it’s worth, even if the LA is involved, the question remains the same: Has the liability been created to take advantage of the HB scheme? If the answer is yes, that’s it.

    Doesn’t (necessarily) matter who created it, or who the “guilty” party(ies) is/are.

    #9445
    gerryg
    Participant

    I thought it was Baragrove but then started to doubt myself.

    Glad you could clarify it.

    #9446
    emmadring
    Participant

    CPAG points out that the question is which of the purposes of creating the liability was the dominant purpose? If the dominant purpose was to gain income through HB (which seems likely) then the liability is contrived. But if the dominant purpose was simply to provide homesfor homeless people, then maybe not. Seems v unlikely though given the circumstances outlined so far.
    Of course thereare many more questions to ask if it is decided that gaining income through HB is not the dominant purpose.

    #9447
    Anonymous
    Guest

    There is actually no such thing as a contrived tenancy. It is a convenient shorthand used by LA’s, but that is not the statutory language.

    Mr Commissioner Jacobs has on many occasions criticised LA’s for using non statutory language when making decisions because it can lead to confussion.

    The statutory language is “created to take advantage of the housiing benefit scheme…” “Take advantage” in this context means simply to abuse the scheme or exploit the scheme.

    Findlay cites several cases , including Baragrove where the isue was considered by the courts. I have still not seen the full text of Baragrove, but it was clear that in that case, the company were using the provisions of the old Reg 11 in order to charge extortionate rents. I am not sure this is necessarily so in the present case. It is inevitable that social housing providers will depend on housing benefit to pay off loans.

    There is also the social policy issue much supported by the government of encouraging people into work. If such work is low paid, then even though the HB taper is only 65% and not 100% as is the case with IS and JSA, then there will inveitably be a poverty trap where rents and other housing costs are high. Lower rents will serve to avoid that poverty trap. The project does not look like an abuse of housing benefit from that perspective if it is a way of financing decent housing in the area

    #9448
    Anonymous
    Guest

    [quote:1cb6cfcfe4]There is actually no such thing as a contrived tenancy. It is a convenient shorthand used by LA’s, but that is not the statutory language.

    Mr Commissioner Jacobs has on many occasions criticised LA’s for using non statutory language when making decisions because it can lead to confusion.[/quote:1cb6cfcfe4]

    Thank Heavens someone agrees with me at last…now, about these “cancellations”…

    #9449
    gerryg
    Participant

    “Contrived” seems a very convenient shorthand for people to use in a forum where things are being discussed by like minded people.I think that we all know what it really means and it’s easier than repeatedly typing “created to take advantage of the housing benefit scheme”. Obviously not the sort of thing to do in any decision or legal paperwork.

    I don’t think old Reg 11 was really the point any of us were making. It was whether or not the tenancies had been created to take advantage. Setting a rent at a particular level to repay a business loan is pure business sense. Any buy-to-let landlord would do the same.

    However when you start to set different levels of rent for different tenants or set a particular level of rent according to a tenant’s circumstances (as they did in Baragrove) it could appear to be trying to take advantage of the scheme, especially when you put it together with the other information about reducing rent levels if the tenant found work or transferring the tenant elsewhere and replacing them with a benefit claimant. It appears to be saying “I’ll charge you more because you won’t have to pay it yourself, the council will pay it for you”.

    That approach may subsidise the tenant who is working but not claiming and reduce poverty among that section of the population. However, if the government wanted that person to get benefit it could change the law – think tax credits or any other changes concerning the redistribution of wealth.

    The socio-economic policies of the government are irrelevant to the question of whether or not the tenancies have been created to take advantage of the scheme no matter how laudable their aims. HB is first and foremost intended to provide people with assistance in paying their rent.

    #9450
    Anonymous
    Guest

    [quote:c6cba41337]”Contrived” seems a very convenient shorthand for people to use in a forum where things are being discussed by like minded people.I think that we all know what it really means and it’s easier than repeatedly typing “created to take advantage of the housing benefit scheme”. Obviously not the sort of thing to do in any decision or legal paperwork.[/quote:c6cba41337]

    I realise we are going off on a bit of a tangent here, but I make no excuses…

    I agree with you to an extent Gerry, but the problem as I see it is that far too many people get used to using incorrect terminology as ‘convenient shorthand’ and then they [i:c6cba41337]do[/i:c6cba41337] use that shorthand in notifications. For example, at my present authority letters regularly go out saying that a new claim has been ‘cancelled’ and the reason is ‘Reg 7 – contrived’. Utter garbage.

    As a CS&A bod I expect you have experience of training – as a trainer myself, I think it is important to stress to people that they should use the correct terminology. This is not pedantry, it [i:c6cba41337]does[/i:c6cba41337] make a difference, as the correct terminology tells you exactly what it is that’s being discussed. (And I have actually heard trainers teaching people about ‘contrived tenancies’ and ‘cancellations’.)

    As another example, I was discussing a scenario with a person here yesterday who, in one breath, told me they had 20+ years experience in benefits, and in the next referred to ‘the cancellation regs’. Eh? Does that mean you have terminated an award using the suspension & termination provisions in the DAR, or you have ended an award by making a superseding decision under the DAR, or you have ended an award using reg 77/65 of the HBR/CTBR 2006?

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