Landlord and tenant – Human rights – Possession – Appellant taking tenancy of property with option to purchase under shared-ownership scheme – Tenancy agreement reserving market rent – Option agreement providing for deposit incentive in event of purchase in amount by which market rent paid exceeding a social rent – Respondent landlord obtaining possession order when appellant falling into substantial arrears of rent – Whether this a disproportionate interference with appellant’s rights European Convention on Human Rights – Whether part of rent properly to be regarded as contribution to deposit – Appeal dismissed
In 2009, the appellant moved into a two-bedroom, shared-ownership property in the respondent’s social housing development under a scheme by which purchasers who did not have the deposit to buy could first rent it at a market rather than a social rent, with a proportion of that rent representing a “deposit incentive”, contributing to the deposit in the amount by which the market rent exceeded the social rent. The application process for the property had included an assessment of affordability, although the respondent had failed to disclose that she intended to apply for housing benefit to assist with the rent. The appellant signed an assured shorthold tenancy agreement, which was on the respondent’s standard terms and conditions and reserved a rent of £700 per calendar month, payable weekly in arrears. She also signed an option agreement setting out her right to purchase the property and providing for the deposit incentive to be credited against the purchase price in the event that the option was exercised. Termination of the tenancy was to bring the option to an end.
From January 2010, the appellant fell into arrears with her rent owing to financial difficulties resulting from a car accident and her pregnancy with her second child, both of which affected her ability to work. In August 2011, following the service of a notice of possession under section 21 of the Housing Act 1988, the respondent applied for a possession order. The appellant contended that the tenancy agreement was a sham so far as it identified the monthly payment of £700 as rent only, whereas it actually included a contribution to the deposit. In the court below, the judge rejected that contention, made an order for possession and gave judgment against the appellant for arrears of rent in the sum of £9,046.82.
The appellant appealed. She accepted that she could not afford to live at the property and therefore did not seek to reverse the possession order. However, she claimed that she was entitled to the return of the deposit element and submitted that the respondent’s claim to recover possession and to terminate the option was a disproportionate interference by a public authority with her rights to respect for her home and her possessions under, respectively, Article 8 of, and Article 1 of the First Protocol to, the European Convention on Human Rights, in circumstances where the arrears in arithmetical terms were represented by the deposit rather than the rental element of the £700. The respondent conceded, for the purposes of the proceedings, that it was a public authority.
Held: The appeal was dismissed.
But for her argument about the effect of the tenancy arrangements, the appellant would have no answer to the claim for possession on Convention grounds. It would ordinarily be proportionate for a public authority to seek and obtain possession since the proportionality of interfering with the tenant’s family and property rights required to be judged in the light of the absence of any right under domestic law for the tenant to retain possession against the landlord and the duty of the public authority to manage the limited resources comprised in its housing stock: Manchester City Council v Pinnock (No 2) [2010] UKSC 45; [2011] 2 AC 104 applied. The property had not been provided to the appellant as social housing but as part of a scheme designed to enable applicants to acquire ownership without having to enter into an immediate purchase with the financial commitment that would involve. The appellant had fully understood the nature of the scheme and its commercial realities. The respondent had done its best to assess the appellant’s ability to afford the outgoings involved, but the appellant’s assessment of her own financial prospects had been over-optimistic and she had failed to disclose that she would need support in the form of housing benefit. The scheme was not intended for tenants who depended on housing benefit and the appellant’s application would not have been accepted had she disclosed that fact. The appellant’s car accident and later pregnancy did not outweigh the competing interests of the respondent in utilising the property as part of a shared-ownership scheme, nor did they justify the de facto conversion of the property into social housing, which it was never intended to be.
Accordingly, the key to the court’s intervention was the appellant’s contention that the £700 monthly payment was not just rent but included the deposit element. That could affect the proportionality review only if the deposit element fell to be treated as a fund belonging beneficially to the appellant, so as to amount to one of the appellant’s possessions within the scope of Article 1 of the First Protocol; otherwise, the appellant’s case was largely indistinguishable from that of the social tenant who did not pay her rent. On an analysis of the contractual arrangements between the parties, the deposit element was not a possession of the appellant. The tenancy agreement reserved the entire £700 as rent and made no reference to part of the rent being appropriated towards a future deposit under a shared-ownership purchase. The option agreement provided for the deposit incentive to be calculated at the date of completion of the sale and made the entitlement to the credit dependent on the appellant being able to exercise her rights under the option agreement, which she now accepted she could not do. There was nothing in the option agreement that gave the appellant a proprietary claim to the deposit incentive.
The appellant could not establish that the actual agreement she made was different from the terms of the documents she had signed. The judge had correctly found that the tenancy was not a sham in the absence of any evidence of a common intention by the appellant and the respondent to deceive any third party about the terms and effect of the tenancy agreement. Moreover, it was impossible to deduce any intention on the part of the respondent or the appellant to contract other than on the terms of the agreements into which they had entered: AG Securities v Vaughan; Antoniades v Villiers [1990] 1 AC 417; [1988] 2 EGLR 78; [1988] 47 EG 193 distinguished. It followed that the appellant had not been deprived of any possession and had no defence to the claim for possession or to any cause of action for the payment of the deposit incentive.
Nathalie Lieven QC and Sally Blackmore (instructed by Shelter West Midlands Housing Advice Service) appeared for the appellant; Christopher Baker (instructed by Anthony Collins Solicitors LLP, of Birmingham) appeared for the respondent.
Sally Dobson, barrister
Landlord and tenant – Human rights – Possession – Appellant taking tenancy of property with option to purchase under shared-ownership scheme – Tenancy agreement reserving market rent – Option agreement providing for deposit incentive in event of purchase in amount by which market rent paid exceeding a social rent – Respondent landlord obtaining possession order when appellant falling into substantial arrears of rent – Whether this a disproportionate interference with appellant’s rights European Convention on Human Rights – Whether part of rent properly to be regarded as contribution to deposit – Appeal dismissedIn 2009, the appellant moved into a two-bedroom, shared-ownership property in the respondent’s social housing development under a scheme by which purchasers who did not have the deposit to buy could first rent it at a market rather than a social rent, with a proportion of that rent representing a “deposit incentive”, contributing to the deposit in the amount by which the market rent exceeded the social rent. The application process for the property had included an assessment of affordability, although the respondent had failed to disclose that she intended to apply for housing benefit to assist with the rent. The appellant signed an assured shorthold tenancy agreement, which was on the respondent’s standard terms and conditions and reserved a rent of £700 per calendar month, payable weekly in arrears. She also signed an option agreement setting out her right to purchase the property and providing for the deposit incentive to be credited against the purchase price in the event that the option was exercised. Termination of the tenancy was to bring the option to an end.From January 2010, the appellant fell into arrears with her rent owing to financial difficulties resulting from a car accident and her pregnancy with her second child, both of which affected her ability to work. In August 2011, following the service of a notice of possession under section 21 of the Housing Act 1988, the respondent applied for a possession order. The appellant contended that the tenancy agreement was a sham so far as it identified the monthly payment of £700 as rent only, whereas it actually included a contribution to the deposit. In the court below, the judge rejected that contention, made an order for possession and gave judgment against the appellant for arrears of rent in the sum of £9,046.82.The appellant appealed. She accepted that she could not afford to live at the property and therefore did not seek to reverse the possession order. However, she claimed that she was entitled to the return of the deposit element and submitted that the respondent’s claim to recover possession and to terminate the option was a disproportionate interference by a public authority with her rights to respect for her home and her possessions under, respectively, Article 8 of, and Article 1 of the First Protocol to, the European Convention on Human Rights, in circumstances where the arrears in arithmetical terms were represented by the deposit rather than the rental element of the £700. The respondent conceded, for the purposes of the proceedings, that it was a public authority.Held: The appeal was dismissed. But for her argument about the effect of the tenancy arrangements, the appellant would have no answer to the claim for possession on Convention grounds. It would ordinarily be proportionate for a public authority to seek and obtain possession since the proportionality of interfering with the tenant’s family and property rights required to be judged in the light of the absence of any right under domestic law for the tenant to retain possession against the landlord and the duty of the public authority to manage the limited resources comprised in its housing stock: Manchester City Council v Pinnock (No 2) [2010] UKSC 45; [2011] 2 AC 104 applied. The property had not been provided to the appellant as social housing but as part of a scheme designed to enable applicants to acquire ownership without having to enter into an immediate purchase with the financial commitment that would involve. The appellant had fully understood the nature of the scheme and its commercial realities. The respondent had done its best to assess the appellant’s ability to afford the outgoings involved, but the appellant’s assessment of her own financial prospects had been over-optimistic and she had failed to disclose that she would need support in the form of housing benefit. The scheme was not intended for tenants who depended on housing benefit and the appellant’s application would not have been accepted had she disclosed that fact. The appellant’s car accident and later pregnancy did not outweigh the competing interests of the respondent in utilising the property as part of a shared-ownership scheme, nor did they justify the de facto conversion of the property into social housing, which it was never intended to be.Accordingly, the key to the court’s intervention was the appellant’s contention that the £700 monthly payment was not just rent but included the deposit element. That could affect the proportionality review only if the deposit element fell to be treated as a fund belonging beneficially to the appellant, so as to amount to one of the appellant’s possessions within the scope of Article 1 of the First Protocol; otherwise, the appellant’s case was largely indistinguishable from that of the social tenant who did not pay her rent. On an analysis of the contractual arrangements between the parties, the deposit element was not a possession of the appellant. The tenancy agreement reserved the entire £700 as rent and made no reference to part of the rent being appropriated towards a future deposit under a shared-ownership purchase. The option agreement provided for the deposit incentive to be calculated at the date of completion of the sale and made the entitlement to the credit dependent on the appellant being able to exercise her rights under the option agreement, which she now accepted she could not do. There was nothing in the option agreement that gave the appellant a proprietary claim to the deposit incentive.The appellant could not establish that the actual agreement she made was different from the terms of the documents she had signed. The judge had correctly found that the tenancy was not a sham in the absence of any evidence of a common intention by the appellant and the respondent to deceive any third party about the terms and effect of the tenancy agreement. Moreover, it was impossible to deduce any intention on the part of the respondent or the appellant to contract other than on the terms of the agreements into which they had entered: AG Securities v Vaughan; Antoniades v Villiers [1990] 1 AC 417; [1988] 2 EGLR 78; [1988] 47 EG 193 distinguished. It followed that the appellant had not been deprived of any possession and had no defence to the claim for possession or to any cause of action for the payment of the deposit incentive.Nathalie Lieven QC and Sally Blackmore (instructed by Shelter West Midlands Housing Advice Service) appeared for the appellant; Christopher Baker (instructed by Anthony Collins Solicitors LLP, of Birmingham) appeared for the respondent.Sally Dobson, barrister
