In CE v Maldon District Council  UKUT 565 (AAC) (Judge Mark), the Upper Tribunal considered the effect on commerciality of a letting between a son and his mother where the mother was suffering from a fatal illness.
In CE v Maldon District Council (HB) (Housing and council tax benefits: liability, commerciality and contrivance)  UKUT 565 (AAC) (Judge Mark), the Upper Tribunal considered the effect on commerciality of a letting between a son and his mother where the mother was suffering from a fatal illness.
The claimant had been referred to a hospice for end of life care. She had a hospital profile bed, walking frame, commode and oxygen included in the care package. The claimant’s son let a four bedroom house to her. The son owned the house and had previously let it on the open market. The claimant only lived on the ground floor of the two-storey house because of her problems.
A claim for housing benefit (HB) was made in July 2014, when the claimant stated renting the house for £80 per week. In or around September 2014 a stair lift was added to the property which meant she was able to use the first floor. The rent was increased to £150 per week by way of an assured shorthold agreement prepared by a letting agency.
A First-tier Tribunal (FtT) found that the tenancy was not on a commercial basis as:
- the rent was not a commercial one for a four-bedroom property;
- a commercial landlord would not legally increase the rent during the tenancy; and
- a commercial landlord would not have allowed arrears of over £2000 to have built up without formal action being taken.
The Upper Tribunal allowed the appeal and remitted the case to a new tribunal. The Judge held that the FtT’s approach was wrong in law on the following grounds.
First, charging a low rent did not on its own make an agreement non-commercial, as charities and voluntary organisations and some individuals choose to let at below market rents without making those lettings uncommercial.
Secondly, the circumstances surrounding the installation of the stair lift and its possible relationship to the rent increase had not been considered.
Thirdly, the Judge said that there are many cases in which landlords who let to tenants who are known to be reliant on HB to pay the rent where the landlord will await the outcome of an application for benefit and of any appeal.
The Judge referred to a passage from CH/296/2004:
“Rackman is not the only model of a commercial landlord. There are many landlords who are prepared to accept the rent that can be obtained rather than insist on the full contractual rent and others who are prepared to be patient while the claim and appeal process is in process.”
The Judge added that while the factors considered by the FtT were relevant:
“[T]here are no rigid rules in determining what is commercial and as Mr. Commissioner Jacobs pointed out in CH/296/2004, a letting may still be commercial even if it is one that the landlord would only contemplate with a relative or close friend”.