The House of Lords has ruled on an appeal in a right-to-buy case concerning whether housing benefit can be offset against the purchase price in the event of delay on the part of the local authority.
Southwark Council lost its bid to overturn a Court of Appeal ruling that where a tenant who is exercising his or her right to buy serves an operative notice of delay on the council, subsequent payments of housing benefit may be deducted from the purchase price as though they were payments of rent made by the tenant.
In November 1999, Colin Hanoman, a council tenant living in Northfield House, London SE15, claimed a right to buy his one-bedroom flat, the rent for which was paid from housing benefit rather than by Hanoman.
The council initially challenged the authenticity of the application, but, in 2004, the High Court held that the claim was valid and the council was obliged to deal with it.
The council calculated the premium payable by Hanoman to exercise his right to buy to be £17,000, which represented the then market value of the flat of £55,000 less a discount of £38,000.
However, since the council had failed to reply to the initial notice in time, Hanoman served several notices of delay, alleging that the premium payable on the grant of the lease should be reduced to nil.
Under section 153A and 153B of the Housing Act 1985, the notices of delay obliged the landlord to deduct from the purchase price an amount based on the rent paid during the period of the delay.
The county court and the High Court subsequently ruled against Hanoman on that issue, but, in June 2008, the Court of Appeal overturned those decisions.
Giving the lead judgment dismissing the council’s appeal, Lord Scott of Foscote said: “I would reject the literal construction of ‘payment of rent’ that is contended for and conclude that the crediting of housing benefit to the rent account of a local authority tenant… is a payment of rent for the purposes of section 153B of the 1985 Act.”
Hanoman v Southwark London Borough Council House of Lords (Lord Phillips of Worth Matravers, Lord Hoffmann, Lord Scott of Foscote, Lord Rodger of Earlsferry and Lord Brown of Eaton-under-Heywood) 10 June 2009.
Christopher Heather (instructed by the legal department of Southwark London Borough Council) appeared for the appellant; Richard
