HOUSING BENEFIT AND LETTING ARRANGMENTS
BETWEEN PARENTS AND THEIR DISABLED ADULT CHILDREN
A SUMMARY OF THE CASE LAW
1. If a parent rents out a self-contained property to a grown-up disabled child, then, in most circumstances, the claimant should be entitled to Housing Benefit (‘HB’) for the rent. However, the authority administering HB is required, to consider whether the arrangement is:
- on a “commercial basis” rather than an informal arrangement between family members (Regulation 9(1)(A) of the Housing Benefit Regulations 2006 (SI 2006/213) or;
- where the liability under the agreement has been set up “to take advantage of the Housing Benefit scheme” – also known as a ‘contrived tenancy’ (Regulation 9(1)(l)).
Guidance from case-law
2. The question of whether a claimant was barred from claiming HB by these provisions in a case where the parent who granted the letting/tenancy was also providing care for his disabled adult child was considered in CH/296/2004 in some detail. The case concerned a disabled claimant who was 23 years of age and who had severe difficulties in social interaction and had been diagnosed with Pervasive Developmental Disorder. The claimant’s father was experiencing financial difficulties and decided to move into a new house with a self-contained flat for his son. They entered into a tenancy agreement and the son claimed HB in order to pay the rent. The evidence showed that the claimant was able to function independently, but required support in order to achieve that independence. His parents were able to provide support from their dwelling. The contractual rent was set at £520 a month but, following a rent officer’s assessment, the eligible rent was fixed at £350. The claimant could not afford to pay the rent and pending the outcome of the HB appeal he was paying £200 a month from his own income. The local authority refused to award HB on the basis that the tenancy was not on commercial basils. This was confirmed by an appeal tribunal, which in its reasons for refusing the HB claim emphasised the intimate and personal aspects of the arrangement between the claimant and his father.
3. Allowing the claimant’s appeal the Commissioner held that there is nothing necessarily incompatible between a commercial arrangement and a caring or support arrangement between the landlord and the tenant. This was shown by the fact that the regulations contains a list of ineligible charges (Schedule 1), including those in respect of general counselling or support services. If the charge is ineligible, no HB is payable in respect of it. But the claimant is not otherwise automatically barred from entitlement to HB. The Commissioner said this shows that the provision of support in any form is potentially compatible with an arrangement for occupation being on a commercial basis (para ).
4. On the issue of the father accepting £200 instead of the rent actually due under the contract, the Commissioner said that many landlords will be prepared to accept the rent that can be obtained rather than insist on the full contractual rent or to be patient while the claim and appeal process takes its course, without the arrangement losing its commercial character, and that “Rackman is not the only model of a commercial landlord” (paras -).
5. SG v Epping Forest District Council  UKUT 41 (AAC), on the other hand, is an example of an arrangement made by parents for their disabled adult child where Regulation 9 was found to apply and HB was refused. The claimanthad learning difficulties and a visual impairment and qualified for social services assistance with his daily needs. His parents purchased a house which included a one bedroom dwelling, which they intended to let on the open market. Their son saw an opportunity to establish some independent living and, with the agreement of his parents, started living there in March 2008. A claim for HB was subsequently made by the son in April 2008, though the tenancy agreement was not signed by the son. The HB claim was refused on the basis that the tenancy was not on a commercial basis and the decision was upheld by an appeal tribunal. While the Upper Tribunal held that there had been an oral agreement between the claimant and his parents to enter into a tenancy, the judge concluded after looking at the arrangement in the round that it was not on a commercial basis because there was “no realistic prospect” that the terms of the agreement would be enforced against the claimant by his parents (para ).
6. A further consideration in cases where the parent wishes to grant a tenancy/letting to their adult child is whether the claimant has the mental capacity to understand and sign a tenancy agreement. The issue arose in Wychavon District Council v EM (HB)  UKUT 144 (AAC), where the claimant was profoundly physically and mentally disabled and needed round-the-clock carers. Her parents had adapted an annexe to their house for her accommodation, and there was a tenancy agreement purportedly between the claimant and her father. The UT Judge found that the HB claim failed because there was no liability to make payments under Regulation 8 as the claimant was incapable of being a party to any agreement and hence there was no agreement, and hence no liability to pay rent could be based upon it. However, in a subsequent decision, Wychavon District Council v EM UKUT 12 (AAC),  AACR 41, based on the same facts, the UT judge set aside his initial decision and replaced it with a decision that the claimant wasliable to make payments under the agreement which resulted in entitlement to HB, either by application of the common law principles or by the provisions of section 7 of the Mental Capacity Act 2005 – that where a person without capacity is supplied with “necessaries”, which includes accommodation, they are obliged to pay a reasonable sum for them.
List of Relevant Factors
7. When considering whether a tenancy/letting granted by a parent who is providing support to a disabled adult child is caught by the ant-abuse provisions (on whether the tenancy is on a commercial basis (Reg 9(1)(a)) or whether it is contrived (Reg 9(1)(l)); the following factors and guidance from case-law will be relevant:
- The local authority must consider whether it is an ‘at arm’s length’ arrangement where the terms of the tenancy are enforceable (Reg 9(2) of the HB Regs).
- A long-term stable relationship between the parties does not necessarily show the agreement was not on “a commercial basis” (R(H) 1/03, para 18(5)).
- A relationship of care and support provided to the claimant by a parent who is also a landlord is not incompatible with a commercial relationship. The service charge provisions recognise this: see CH/296/2004 para .
- A landlord (who is also a parent) may decide that reducing the contractual rent to the amount their child can afford is preferable to evicting them. But that would not mean that the arrangement was not commercial: see CH/296/2004 para -
- An arrangement may still be commercial if the landlord has good reasons for deciding that they would not let it to anyone other than the tenant: see CH/296/2004 para . But note that there is also authority to the effect that the identity of the claimant is generally irrelevant because a landlord will normally be prepared to deal with ‘the world at large’ (CH/663/2003, para ).
- It is possible for an adult claimant without capacity to be liable to make payments and therefore eligible for HB: see Wychavon District Council v EM  UKUT 12 (AAC)  AACR 4. But the better course is for the parent/landlord to obtain prior authority from the Court of Protection to sign a tenancy on behalf of the individual lacking mental capacity: see Court of Protection Guidance: Applications to the Court of Protection in relation to tenancy agreements February 201
8. It will be apparent that the question of whether Regulation 9 applies to an arrangement between parents and grown-up children for whom they are providing care and support is a fact-sensitive issue which needs to be determined by the local authority on a case-by-case basis.