By : Alastair Redpath-Stevens
RSL managers will be all too familiar with mandatory performance indicators GNPI28 and 29 (and the equivalent supported housing indicators SHPI15 and 16) which measure the percentage of the rent debit collected and the arrears as a percentage of the rent debit at the year end. These key indicators are used, together with others, to judge the extent to which the RSL sector is performing, including whether intervention is required, as well as to inform investment decision-making.
One element in the equation, over which RSLs have no direct control, is the performance of housing benefit authorities. Delays in the processing and payment of housing benefit claims may have a considerable impact on rent collection and arrears control. At best the arrears may be ‘technical’ in that payment will be made at some point in the future, albeit in a later financial year, but at worse technical arrears may crystallize into real arrears when, for whatever reason, claims are rejected.
Housing Corporation Regulatory Circular 07/04 seeks to address this problem, by providing that “[a]ssociations should make every effort to establish effective ongoing liaison with housing benefit departments and to make direct contact with them before taking enforcement action. A certificate should be obtained, if possible, to confirm that there are no outstanding benefit enquiries, according to Department of Work and Pensions good practice guidance.”
Notwithstanding the fact that effective liaison may improve an RSL’s paper performance, it may also help to ensure, in accordance with the Circular, that possession proceedings are not started in cases where tenants “have (1) a reasonable expectation of eligibility for housing benefit; (2) provided the local authority with all the evidence required to process a housing benefit claim; (3) paid required personal contributions towards the charges.”
In appropriate cases, RSLs may seek to limit their exposure by taking possession proceedings, including under ground 8 which provides that the court must grant possession if when the claim is finally heard and when the notice of seeking possession was served, then if the rent is payable weekly or fortnightly at least 8 weeks’ rent is unpaid, or if payable monthly then at least two month’s rent is unpaid.
The mandatory nature of ground 8 has often led judges to refuse to hear evidence of the arrears in cases where tenants have said that their housing benefit had not been determined, thereby justifying an adjournment. This practice has now been ruled out by the Court of Appeal in North British Housing Association v Lorraine Matthews and others  EWCA Civ 1736. The Court held that adjournments were only justified for procedural reasons, such as where there was insufficient court time to hear the case; where there was a substantive defence, e.g. a set-off for disrepair; and, in exceptional circumstances.
The exceptional circumstances category is extremely narrow, and reserved for cases “where the refusal of an adjournment would be considered unjust by any fair-minded person.” The Court considered that such examples might include where a tenant was on his way to court carrying the arrears of rent in cash, only to be robbed; or, where the housing benefit authority had promised to pay all of the arrears of housing benefit, but a computer failure prevented this happening until after the hearing date. The Court did not, however, consider that the fact that arrears were attributable to maladministration by the housing benefit authority would be an exceptional circumstance: if anything, it was “a sad feature of contemporary life that housing benefit problems are widespread.”
Although the Court closed the door on one form of housing benefit-related challenge, it did, potentially open up another by hinting very strongly that in an appropriate case a failure by an RSL to liaise properly with the housing benefit authority might enable a tenant to obtain an adjournment pending judicial review, because he or she has an arguable substantive defence based on abuse of power by the landlord. Although familiar to local authority landlords: see ManchesterCity Council v Cochrane (1999) 31 HLR 810, this approach will be alien to RSLs, as they have traditionally considered themselves immune to judicial review.
It may well be that with the shift from local authority housing provision to a social housing sector dominated by RSLs, and particularly in the case of LSVT landlords, that the Administrative Court will move away from the traditional view and be more inclined to find that RSLs should be subject to judicial control. Otherwise, it is difficult to see why the Court of Appeal, rather than rejecting the possibility, should have sounded a warning that an RSL which failed to follow the Circular Housing Corporation guidance in Regulatory Circular 07/04 dated July 2004, and which did not liaise with the housing benefit authority on outstanding housing benefit issues right up to the day of the hearing may be acting unfairly and unlawfully.
If anything, by emphasising the requirement to liaise with the benefit authority right up to the date of the hearing, rather than to before taking enforcement action, the Court of Appeal’s approach goes further than the Circular. Indeed, the Court stated that “the Housing Corporation may consider it wise to expand its advice about the need for effective liaison with housing benefit departments right up to the time when a possession claim for rent arrears is heard.”
It is evident that the Court had in mind the emphasis in the Circular on possession being retained as a last resort. In fact this places a considerable burden on RSLs to ensure that they keep abreast of developments. For many RSLs this will not pose a problem, for they will have in place arrangements to ensure that both the uptake and the continuation of housing benefit are maximised, and that decisions to seek possession orders are properly informed.
For whatever reason, housing benefit departments frequently cannot be relied upon to rectify matters before a possession claim is heard. Whether or not in the past, as suggested by the CAB in their report Possession action – the last resort? any RSLs ever used possession proceedings as a way of trying to speed up benefit determination, such behaviour might well now lead to a finding of unlawful behaviour. Irrespective of whether or not the Corporation does amend the Circular, RSLs would be wise to heed the Court’s warning.