Right to buy – Housing Act 1985 – Housing benefit – Section 134(1A) of Social Security Administration Act 1992 – Respondent tenant exercising right to buy – Whether price payable to take account of rent paid by housing benefit as rent rebate – Appellant landlords ordered to repay premium – Appeal dismissed
The respondent was the tenant of a flat let by the appellant council. In 1999, he served a notice on the appellants, under section 122 of the Housing Act 1985, seeking to exercise his statutory right to buy. The appellants subsequently maintained that the notice had been withdrawn and that they were not obliged to deal with it. However, in 2004 the respondent obtained a declaration in the High Court that his right-to-buy application was subsisting: see [2004] EWHC 2039 (Ch); [2004] 27 EG 129 (CS).
Meanwhile, in 2003, the respondent served an initial notice of delay on the appellants under section 153A, and then, having received no counternotice, served a valid operative notice of delay. Section 153B consequently came into play such that, from the default date until service of a valid counternotice, any payments of rent fell to be treated as payments on account towards the premium payable for the purchase of the flat. In July 2004, the appellants finally served a counternotice admitting the respondent’s right to buy.
In September 2004, the parties agreed that, subject to section 153B, the price payable for the flat was £17,000, representing the 1999 market value of £55,000 less the statutory discount of £38,000. The appellants granted a lease on payment of £17,000 in June 2005. However, the respondent maintained that he was entitled to the repayment of that sum since the entire premium had already been paid on account by rent payments made between the default date and that of the counternotice. The appellants argued that credit should not be given for those rent payments since they had been made from housing benefit credited to the respondent’s rent account by way of rebate under section 134(1A) of the Social Security Administration Act 1992, and not paid by the respondent personally.
The county court found in favour of the appellants but the Court of Appeal reversed that decision and ordered them to repay the premium to the respondent, together with interest: see [2008] EWCA Civ 624; [2008] 24 EG 140 (CS). The appellants appealed.
Held: The appeal was dismissed.
The crediting of housing benefit to a tenant’s account by way of rebate in reduction of the rent due, under section 134(1A) of the 1992 Act, was a “payment” of rent for the purposes of section 153B of the 1985 Act. The meaning of “payment” could vary according to the context: Elmdene Estates Ltd v White [1960] 1 QB 1 considered. The purpose of sections 153A and 153B was to penalise local authorities if they delayed in giving effect to a tenant’s attempts to exercise his or her right to buy. To give a limited meaning to “payment of rent” would enable a local authority to avoid that sanction where the tenant in question was entitled to housing benefit, and would therefore fail to give effect to that purpose. Moreover, a literal construction of the expression “payment of rent” would produce anomalous results between tenants of landlords such as local authorities, which could provide housing benefit by way of rent rebate, and those of landlords such as housing associations, which could not, and whose tenants would instead receive housing benefit by the payment of rent allowances under section 134(1B). On the appellants’ construction, the latter but not the former would be entitled to the benefit of section 153B. Such a difference was unsupported by any discernible policy and could not be supposed to reflect parliamentary intention.
Christopher Heather (instructed by the legal department of Southwark London Borough Council) appeared for the appellants; Richard Drabble QC and Dominic Preston (instructed by Glazer Delmar) appeared for the respondent.
Sally Dobson, barrister
