R (on the application of Heffernan) (FC) (Appellant) v The Rent Service) (Respondents)

When determining a local reference rent under paragraph 4 of Schedule 1 to the Rent Officers (Housing Benefit Functions) Order 1997, a rent officer must build the locality from the claimant’s neighbourhood and one or more adjoining neighbourhoods. Each additional neighbourhood must satisfy the statutory comparison of specified amenities.

The officer must stop adding neighbourhoods once the resulting area contains enough residential premises and tenancies of the required variety. The specified amenities are exhaustive and require a genuine, though not elaborate, comparison of type and standard. General assertions about transport links or a broad geographical area cannot replace the statutory analysis. Any official guidance must remain accurate, non-prescriptive and subordinate to the officer’s assessment of the individual case.

The appellant, a disabled tenant receiving welfare benefits, rented an apartment in central Sheffield. Rent officers determined that his contractual rent was reasonable for its vicinity and neighbourhood, but capped his housing benefit by reference to a lower local reference rent. They treated the whole city of Sheffield and part of its rural hinterland, comprising 13 neighbourhoods, as the relevant locality.

A Deputy High Court Judge quashed the determinations: [2006] EWHC 2478 (Admin). The Court of Appeal restored them, holding that the rent officers could reasonably select the Sheffield area: [2007] EWCA Civ 544.

The central issue before the House was how a rent officer must construct a locality under paragraph 4(6) of Schedule 1 to the Rent Officers (Housing Benefit Functions) Order 1997, particularly the relationship between its neighbourhood, amenities and property-variety requirements.

By a majority of three to two, the appeal was allowed. Lord Neuberger delivered the principal majority opinion. Lord Hope agreed and gave additional reasons. Lord Scott agreed with both. Lord Rodger dissented, with Lord Walker agreeing.

1. Per Lord Neuberger and Lord Hope, paragraph 4(6)(a) requires the locality to contain the dwelling’s neighbourhood and at least one adjoining neighbourhood. Paragraph 4(6)(c) determines how many qualifying neighbourhoods are needed. Once the area contains enough residential premises and tenancies of the required variety, the rent officer must stop adding neighbourhoods. Paragraph 4(6)(b) excludes any proposed additional neighbourhood which does not meet its amenities criterion.

2. The phrase “having regard to” in paragraph 4(6)(b) is exhaustive. The officer must consider the listed facilities and services for health, education, recreation, personal banking and shopping. He must identify the amenities accessible from the additional neighbourhood and compare their type and standard with those accessible from the dwelling’s neighbourhood. A tenant need not have identical access to each amenity, and the comparison may consider the amenities as a whole.

3. The assessment requires professional judgment but must be demonstrably conducted in accordance with the statutory formula. Amenities of a “similar standard” require a genuine qualitative assessment. It is insufficient merely to establish that facilities comply with legal or public-authority requirements. The exercise need not be minute or unrealistically demanding.

4. The rent officers had begun with the whole Sheffield area and relied on broad assertions about reasonable choice, transport and similar facilities. They had not built the locality by considering qualifying adjoining neighbourhoods successively, nor stopped when the necessary variety was obtained. Their treatment of the amenities requirement was also too cursory. The determinations were therefore unlawful.

5. Lord Rodger, dissenting, considered all three subparagraphs to be cumulative qualifications of the whole area. In his view, paragraph 4(6) imposed no maximum size and permitted the officer to include any contiguous neighbourhood meeting the criteria. Lord Walker agreed that the appeal should be dismissed.

The Court of Appeal’s order was reversed, and the Deputy High Court Judge’s order quashing both re-determinations was restored.

1. House of Lords: By a majority of three to two, allowed the tenant’s appeal and restored the order quashing both rent re-determinations: [2008] UKHL 58.
2. Court of Appeal: Allowed the Rent Service’s appeal and held that the rent officers were entitled to select the Sheffield area as the locality: [2007] EWCA Civ 544.
3. High Court, Administrative Court: A Deputy High Court Judge quashed the two re-determinations because the rent officers had followed an erroneous broad-area approach and had not properly examined compliance with paragraph 4(6): [2006] EWHC 2478 (Admin).