Khatun & Ors v London Borough of Newham

A housing authority acting under its homelessness duties must give an applicant a reasonable opportunity to consider and, where requested, view accommodation before requiring the applicant to assume contractual obligations. Statutory guidance on reasonable time for considering offers must be followed unless there is a lawful reason to depart from it. Administrative targets and operational convenience cannot displace the interests of vulnerable applicants. A statutory right to seek a review does not cure a coercive process which pressures an applicant to sign first and challenge suitability later. The Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC apply to contracts transferring interests in land, including leases, and may apply where a local authority acts as a public supplier.

Three homeless households brought judicial review proceedings against the London Borough of Newham. The authority owed each household a continuing duty under section 193 of the Housing Act 1996 and had transferred applicants from bed and breakfast accommodation to leased accommodation under a policy requiring them to sign tenancy agreements immediately.

Applicants were not given the property address or an opportunity to view the accommodation before signing. Refusal or delay could lead to withdrawal of the offer and cancellation of existing accommodation. The challenges concerned the lawfulness of that policy and, in Khatun’s case, whether the tenancy terms fell within the Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC.

1. Allocation policy. The applications for judicial review were allowed. The authority’s policy was unlawful because it pressured applicants, by threatened legal consequences, to sign tenancy agreements before they had a reasonable opportunity to consider the accommodation. The process was coercive and unfair and failed to give sufficient regard to the applicants’ interests.
2. The statutory Code of Guidance issued under section 182 of the Housing Act 1996 advised authorities to allow a reasonable period for considering offers, taking account of the applicant’s circumstances, need for advice and familiarity with the property. That guidance was directed not merely to obtaining information for the authority’s suitability assessment. It promoted a fair and practical result and enabled applicants to make informed decisions.
3. The authority was entitled to consider its operational pressures and housing targets, but those targets could not deflect attention from the statutory guidance. The authority’s assumption that its own assessment of suitability was paramount was erroneous. It failed to recognise that the applicant’s knowledge of the property, including its physical condition and precise location, was relevant to the decision to assume legal obligations and pay rent.
4. The right to request a review under Part VII of the Housing Act 1996 did not provide an adequate substitute for an opportunity to view before signing. A review could take time and involve uncertainty. Requiring occupation before the applicant could make an informed decision delayed the review process and exposed vulnerable applicants to unsuitable accommodation.
5. Unfair terms regime. The Directive and the 1999 Regulations applied to contracts transferring interests in land, including leases and tenancy agreements. Their purpose, broad interpretative approach and absence of an express exclusion supported that conclusion. The regime also applied to public authorities. The public nature of the supplier was relevant to fairness rather than jurisdiction, and a local housing authority could act as a seller or supplier when carrying on an activity capable of being performed by the private sector.
6. The claimants acted outside any trade, business or profession and were consumers. The court therefore gave judgment for the claimants on the preliminary issues and heard submissions on the appropriate relief and outstanding matters. The claimants received their costs, and the Office of Fair Trading received its costs in the Khatun proceedings.

First-instance judicial review proceedings. Permission to appeal was granted on the Regulations and Directive issues because of their public importance, but refused on the allocation-policy issue.