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    One very important point hasn’t been raised yet here: are these rebate cases or allowance cases? I am assuming rebate because:

    – the Council is using the non-HRA subsidy threshold as a guide for setting the rent, and
    – the Council is leasing the properties from the consortium, so the Council is presumably in full control for the next 10 years

    For the same Council to then say that tenancies are created to take advantage of the scheme seems a nonsense to me:

    “There you go sir/madam, take the keys, the place is yours as long as you pay us £180 a week, of course we assume you’ll be on HB. What? We are charging you [i:c5c3e971ff][b:c5c3e971ff]how[/b:c5c3e971ff][/i:c5c3e971ff] much? That’s outrageous, that is, something should be done about these dodgy landlords. We have a good mind to stop doing business with ourselves if we carry on like this. So we are not going to pay you HB, sorry. Look, we told you to pay £180 a week and you haven’t paid a penny – you cannot go on like this you know. Have you claimed HB? No? Good, because your tenancy is dodgy anyway”

    Not exactly joined up is it?

    I don’t think a Council should ever try to say that its own tenancies are crteated to take advantage of the scheme.

    Kevin D

    Normally, I’d agree it’s a nonsense if the LA is the L/L. But the provision of a tenancy by the LA is not exclusive to a finding, by the same LA, that the liablity has been created to take advantage of the HB scheme. As far as I can see, the crux question remains the same for either rebate or allowance cases.

    The involvement of a third party profit making company doesn’t bode well…. In Paul’s case, it looks like it will be a fine line between “maximising” HB entitlement / rental income and “taking advantage”. Glad I don’t have to make the call……



    That Landlord sounds dodgy to me, have you undertaken a fit and proper person test?


    At the risk of being accused of being a cynic….

    If the scheme discussed here were to be put forward by a private landlord – unconnected with the LA – we would refuse to pay as conrived.

    On the other hand, as this is supported by the LA and the LA decidies to pay who is going to appeal? Not Orchard & Shipman, not the LA and not the homeless person.

    So the debate on whether we should pay is academic becuase we will not have to defend it at Tribunal. As to the BFI / Auditors that is a different though perhaps more relevant question. On the assumption that the DWP are happy with it I can’t see how the LA will have a problem.

    As to HB being used to fund things it was not intended to fund – I agree – but then there is nothing new there.


    Being supported by the LA is part of the issue – they have asked for our advice on whether such a scheme should be and is eligible for HB.

    If I say no then our LA will not pursue the scheme – hence wanting to make the sensible and correct decision is made at the outset.

    However if they did go against our advice and I felt it still should be paid, then we would disallow the claims (provided we are of course sure of our reasons etc) and if necessary take to tribunal.


    I have to say I struggle to see any great difference between this scheme and paying HB on homeless cases generally. Rents are always set with a weather eye on the subsidy threshold and it is acknowledged that HB (to a degree at least) ‘finances’ this. I believe the Audit Commission has harsh words for LA’s who fail to “maximise” HB in these cases?

    Isn’t financing housing what HB does anyway?

    With regard to this scheme, it seems alot of the difficulty would be swept away if the scheme was not advertised as for HB cases only. Why not just say that anyone with the means to pay (from whatever source) could take up a unit?

    I agree with Mr Barker that services need to be joined up, and good hard look at the “created to take advantage” regs is urgently needed in view of what is going on in the real world.


    Hmmm, in general I agree with what is being said and I have no wish to make this difficult for those concerned.

    However I don’t feel I can ignore the presentation and literature that says quite clearly and loudly – this scheme will only apply to those who qualify for HB – not as would be more sensible, this is the rent and HB form should you need help paying the rent.

    I am being asked advice on the basis of what they’ve presented. As pointed out if these were PTEN cases the landlord would have been sent packing, just because a private company want to set up an arrangement and happen to get the council’s homeless service to agree to lease the properties from them is there a difference?

    Kevin D


    The major difference in this case appears to be the involvement of a profit-making 3rd party….. plus a lovely property at the end of a relatively short lease and no suggestion that the rent charges will decrease.

    I think these issues distinguish the scheme from the vast majority of other schemes.

    Just to be clear, in my opinion, even if it’s assumed the LA’s Housing Dept are acting in good faith, a finding of “contrived” can still be made if the actions of a.n. other are to “take advantage etc….”.

    However, it seems clear that Paul wants to pay, so I hope that some sort of resolution can be found.


    Julian Hobson

    Is there a difference between the liability “created to take advantage” which is presumably the fact that there is a liability at all AND the rent level agreed to ?

    I don’t see any problem with individual homeless people being offered accomodation at a rent which the LA knows can be supported in full by the HB scheme without any shortfall between the Hb paid and the subsidy received.

    The alternative for many LA’s using B&B accomodation is the same is practical effect save for the question of finance where subsidy above the threshold is reduced subject to the overall cap.

    The ONLY way this can work so that subsidy is paid upto cap would be for the LA to be the L/L and for thgs to be rent rebate. You say that the LA has full nomination rights, this seems odd given that you are the L/L !

    The literature isn’t worth the paper its written on if (as appears to be the case) the whole thing is a mish mash of the two schemes. I can see why they have put the proposal in those terms but it would never (and could never) work that way.

    Put simply the LA lease the property for ten years and pay the full whack for each property for each week to Lloyds TSB / Orchard & Shipman. They then let those properties to whoever they have a duty to rehouse irrespective of the HB prospects. What then matters is the liability for each individual tenancy and on the face of it reg 9(1)(l) does not apply. Who does and does not get or keep a tenancy is of no concern to Lloyds TSB / Orchard & Shipman as they have already been paid.

    For the most part what you have described is really a bog standard out of the box leasing scheme that happens all over the place. How its been described to you, with a nomination process just can’t work. That is rent allowance and subject to RO control.


    I have a LL in my area who has a number of properties occupied by widows of ex estate employees who were clearly led to believe (on inheriting the property from their deceased spouse) that they would be there for life. The landlord has recently targeted those whom he believes to be eligible for HB and drawn up new tenancy agreements, on the grounds that it is not the purpose of his charitable trust to subsidise tenants who are eligible for help from the state. Those not entitled to HB on income grounds stay “rent free”. I have recently won an appeal tribunal on this case – the chairman found the tenancies to be “contrived”. In my opinion your situation is not so very different. The tenancies are only to be offered to those who are eligible for HB. Surely that is not the criteria for offering social housing.


    Reverting to the subject of the original post

    I see that DWP Circular S1/2007 mentions that a number of LAs are operating temporary to settled schemes such as the one offered by Lloyds TSB / Orchard & Shipman.

    The Circular describes how over a set period of time such schemes convert temporary accommodation into settled homes (which is in-line with the DCLG’s policy objective of reducing the use of temporary accommodation by 2010).

    The only consideration the DWP identify in relation to such schemes is that the LA should ensure that where homes are offered as temporary accommodation prior to their conversion to settled accommodation, the rents are set at a reasonable level (including a reasonable management charge). I take this to mean that there should be a rational basis to the charges levied. In other words it should not just be set at the non-HRA cap level for no reason and if it is set at that level there should be a legitimate reason for it in terms of the economics of the particluar scheme and value for money considerations when compared with what could often be more expensive alternatives.


    To pick up on Andy’s point from about six months ago, I suspect the shorthand use of the term ‘contrived’ was derived from R v Stratford Upon Avon DC ex parte White…

    [quote:a7a5eee4fe]In my judgement the precise language of sub para (b) indicates that there must have been some purposive conduct on the part of those seeking benefit, the liability must appear “ to have been created to take advantage”. This connotes that something has been [b:a7a5eee4fe]contrived[/b:a7a5eee4fe] or devised for the purpose of taking advantage of or exploiting the scheme[/quote:a7a5eee4fe]

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