Saadat & Ors, R (on the application of) v Rent Service

For the purpose of calculating a local reference rent, a rent officer cannot treat an extensive and diverse administrative district as the relevant locality merely because sufficient rental evidence exists across that district. Under Schedule 1 to the Rent Officers (Housing Benefit Functions) Order 1997, locality means an area no larger than is needed to make the prescribed calculations and judgments reliably.

The permissible area depends on the character of the neighbourhood and the available evidence. It must remain geographically and demographically related to the dwelling. A court may intervene where the selected area is either too narrow or too diffuse to serve the statutory purpose, while leaving the precise lawful boundary to the rent officer's expertise.

Four assured shorthold tenants appealed from Maurice Kay J's refusal to quash rent officers' redeterminations of their local reference rents. The redeterminations limited their housing benefit by treating the whole metropolitan borough of Stockport, an area containing markedly different neighbourhoods and rental markets, as the relevant locality.

The tenants contended that the locality should have been their respective immediate areas of Hazel Grove, Bredbury, Reddish and Cheadle Hulme. The Rent Service argued that a rent officer could choose any suitable area which was not irrational.

The central issue was the meaning of “locality” in paragraph 4(2)(a)(i) of Schedule 1 to the Rent Officers (Housing Benefit Functions) Order 1997, read in the context and purpose of the statutory housing benefit scheme.

1. The appeals were unanimously allowed. Sedley LJ delivered the judgment, with which Mummery and Kennedy LJJ agreed. The orders of Maurice Kay J were set aside, the judicial review applications were allowed, and the four rent officers' redeterminations were quashed.

2. The purpose displayed by the Rent Officers (Housing Benefit Functions) Order 1997 was to restrict otherwise payable housing benefit to the midpoint between the non-exceptional upper and lower rents for comparable dwellings in the local market. The local reference rent was deliberately capable of limiting benefit below a contractual rent which was neither significantly nor exceptionally high. Hardship alone therefore could not determine the construction of the Order.

3. That limiting purpose qualified, but did not negate, the fundamental purpose of the housing benefit scheme. The scheme sought to prevent people who were neither under-occupying nor overpaying from becoming homeless through genuine inability to pay. Paragraph 4 did not reveal a purpose of forcing claimants from more affluent neighbourhoods into poorer areas by combining materially different rental markets.

4. “Locality” did not necessarily designate a fixed geographical or administrative unit. In each of paragraphs 1 to 4 of Schedule 1, it meant an area no greater than was required to enable the rent officer reliably to perform the specified calculations and judgments. Its permissible extent depended on the character of the area surrounding the dwelling and the rental evidence available there.

5. Stockport was too large, diverse and arbitrarily related to the subject dwellings to constitute their locality when an immediate locality capable of supplying the necessary evidence could readily be identified. Selecting the entire borough unlawfully allowed rents in poorer neighbourhoods to depress the benefit cap for tenants elsewhere.

6. The court may intervene where an area is too large, just as it may intervene where an area is too narrow to serve the statutory purpose. Subject to those legal limits, the precise boundary remained a matter for the rent officers' expert judgment. The Rent Service was required to redetermine each local reference rent in accordance with the Court of Appeal's judgment.

1. Court of Appeal (Civil Division): The appeals were allowed unanimously. The orders below were set aside, the applications for judicial review were allowed, and the rent officers' redeterminations were quashed: [2001] EWCA Civ 1559.
2. High Court, Queen's Bench Division (Administrative Court): Maurice Kay J declined to quash the four redeterminations. The citation of that decision is not stated in the judgment.