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Taking Advantage of the HB Scheme
Taking Advantage of the HB Scheme
Any provider of exempt accommodation knows that their residents can claim an enhanced rate of Housing Benefit (“HB”) if they meet the necessary criteria under The Housing Benefit Regulations 2006 (“HB Regs”). Whilst there is still a cap on the level of Local Housing Allowance paid to claimants, there is no similar ceiling to the amount of HB payable to those residents who are awarded the exempt status. For providers of this type of accommodation, with all the associated additional costs involved, achieving this exempt rate for their residents can make the difference between survival and closure of their supported housing schemes.
- Whilst the vast majority of providers will work hard to ensure that the claims being paid for their residents who achieve the exempt status are genuinely made, there are some providers who will seek to abuse the system and create a liability simply to take advantage of the enhanced rate of HB payable. In such circumstances, a local authority has the power under regulation 9(1)(l) of the HB Regs, to decide that the liability to pay rent for supported accommodation has been created to take advantage of the HB scheme and therefore refuse to pay the enhanced level of HB claimed.
What does regulation 9 say?
In order to claim HB,an individual must be able to show that they have a genuine liability to pay periodical payments e.g. rent to a landlord. These payments are made to enable the individual to live in a dwelling which they occupy as their home.
- Upon receipt of a claim for HB, a local authority needs to determine if they are satisfied that there is a genuine liability in place. There are some circumstances where a person is to be treated as not liable to make payments in respect of a dwelling and reg 9(1)(l) is one such circumstance:
*9.—(1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where—
(l) .........the appropriate authority is satisfied that the liability was created to take advantage of the housing benefit scheme established under Part 7 of the Act.*
What amounts to a breach?
Sometimes a provider will establish a set up which he believes is genuine but in fact it proves to be a breach of reg 9. Therefore, if a local authority suspects a breach of reg 9, they must take the time to consider why the liability was created in the first place? Did circumstances exist at the time that might point to a provider trying to take advantage of the HB scheme? What was the dominant purpose of the agreement to pay rent?
In the case of CH/39/2007, Commissioner Jacobs said that ‘to take advantage of the scheme’ means something akin to abuse of the scheme or taking improper advantage of it. He clarified that it did not mean however that a provider could not make the most of the opportunities that the scheme presents since it is not the function of reg 9(1)(l) to impede the proper operation of the private rented housing sector. Whilst in R v Solihull MBC HBRB ex p Simpson  1 FLR 140, Kennedy LJ suggested that the use of the words “take advantage” shows that at least in the eye of the beholder there has to be conduct which appears to some extent improper.
- So where a local authority suspect a breach, it is incumbent on them to examine the facts of each case carefully to ensure that they do not deny a claimant benefit that has been genuinely claimed.
MR Associates - November 2022