RM v Sefton Council (HB)

A rented property is a disregarded business asset only where, in the statutory context, the claimant is carrying on a business as a self-employed earner and the asset is used for that business. Mere ownership of a let property, rent collection, repairs and ordinary landlord duties do not suffice.

Whether letting amounts to a business is a question of fact and degree. The tribunal must assess all the circumstances. The number of properties or units is relevant but not decisive. No single factor or checklist determines the issue.

Capital is valued at its current market value, less the prescribed sale allowance and secured encumbrances. Later evidence may be used where it can fairly be related back to the period in issue.

The claimant had bought a flat as her home, later let it to tenants, and claimed housing benefit after moving elsewhere. The local authority refused the claim because her interest in the flat was capital exceeding £16,000.

The First-tier Tribunal, reference SC068/13/14878, dismissed her appeal on 22 May 2014. She appealed with permission to the Upper Tribunal. The remaining issues were whether the flat was a business asset whose value fell to be disregarded and, if not, its value when she claimed benefit.

1. Appeal dismissed. The First-tier Tribunal made no error of law in deciding that the claimant’s flat was not a business asset and that her capital exceeded the prescribed limit.

2. Under Housing Benefit Regulations 2006, the relevant disregard applies to assets of a business in which the claimant is engaged as a self-employed earner. Whether a letting activity is a business depends on the statutory context and on the combined effect of all the facts. A distinction between investment and business is not determinative, since an asset may be both.

3. Letting one property is unlikely, though not incapable, of amounting to a business. Ordinary landlord functions, including collecting rent, arranging repairs and performing landlord obligations, are insufficient. The amount of administration and activity may cross the line in another case, but the number of properties or units is only an indicator. Factors drawn from other contexts may assist, but are neither exhaustive nor essential.

4. The claimant was a conscientious landlord and had undertaken tenancy administration, repairs, tenant coordination and mortgage arrangements. Her leaseholder obligations were largely irrelevant because they would have existed while she occupied the flat. Taken together, her activities did not exceed what many landlords of leasehold flats would undertake. They did not constitute a business.

5. The tribunal was entitled to use later valuation evidence insofar as it could be related back to the relevant period. Applying regulation 47 of the Housing Benefit Regulations 2006, even the claimant’s most favourable figures left equity above £40,000 after the 10 per cent sale deduction. The tenants had not materially reduced the value, and the tribunal was not required to investigate valuation of its own motion.

• Upper Tribunal (Administrative Appeals Chamber): appeal dismissed. The First-tier Tribunal’s decision involved no error of law.

• First-tier Tribunal: dismissed the claimant’s appeal against the local authority’s refusal of housing benefit, reference SC068/13/14878, on 22 May 2014.