Poplar Housing & Regeneration Community Association Ltd v Begum & Ors

When deciding whether possession is reasonable under the discretionary grounds in the Housing Act 1988, the court must consider all relevant circumstances, including the public interest. An appellate court may interfere with a possession decision where the discretion was exercised on a wrong principle, material matters were omitted or the decision was plainly wrong. A suspended order requires cogent evidence that the tenant’s past misconduct will cease. Where social housing has been fraudulently sub-let for profit, the availability of Housing Benefit does not reduce the recoverable unlawful profit: gross receipts are considered before rent paid to the landlord is deducted.

The respondents were assured tenants of a flat let by the appellant, a registered provider of social housing. They moved to another address, sub-let part of the flat for £400 per month, and received Housing Benefit covering the contractual rent. The County Court found breaches of the tenancy and made a suspended possession order, but refused an unlawful profit order.

The appellant appealed against the suspension of possession and the refusal of the unlawful profit order. The central issues were whether the Recorder had properly exercised the statutory discretion and how Housing Benefit affected the calculation of profit under section 5 of the Prevention of Social Housing Fraud Act 2013.

1. Appeal allowed. The Recorder’s exercise of discretion was fatally flawed. In assessing whether suspension was appropriate, he wrongly treated the sub-letting as unprofitable because he overlooked the Housing Benefit received by the respondents. That error contaminated his assessment of their motive and the overall balancing exercise.
2. Under sections 7 and 9 of the Housing Act 1988, the discretion to make a possession order and the discretion to suspend enforcement must be exercised in accordance with the relevant statutory principles. Reasonableness requires consideration of all relevant circumstances, including the public interest. The appellate court must not interfere merely because it would have reached a different conclusion, but may do so where the discretion was exercised on a wrong principle, relevant matters were omitted, irrelevant matters considered, or the result was plainly wrong.
3. The assessment of future conduct must take account of past behaviour, the circumstances in which any promise of compliance is made, and the reliability of the promisor. In a case involving serious criminal or fraudulent conduct, suspension should be ordered only where cogent evidence provides a sound basis for expecting the conduct to cease. There was no such evidence here. The scale and persistence of the fraud, the respondents’ repeated dishonesty, threats, unlawful eviction and subsequent drug-related offending justified an outright order.
4. The possession order was therefore varied so that possession would take effect 21 days after judgment.
5. The statutory conditions for an unlawful profit order were satisfied. For the maximum amount, step 1 requires consideration of the total receipts secured as a consequence of the unlawful sub-letting. That total is not reduced by Housing Benefit. Under step 2, rent paid to the landlord is deducted, but excluding Housing Benefit at step 1 would defeat the statutory purpose of stripping profits from unlawful social-housing sub-letting. The Recorder’s calculation of zero was therefore wrong, and £1,550 was ordered to be paid.

• High Court (Queen’s Bench Division): appeal from the County Court at Central London allowed. The suspended possession order was replaced with an outright order taking effect in 21 days, and an unlawful profit order of £1,550 was made.
• County Court at Central London: the Recorder made a suspended possession order on the discretionary grounds under the Housing Act 1988 and refused an unlawful profit order.