E v Dacorum Borough Council & Anor

For Housing Benefit Regulations 2006, regulation 96(1)(c), the amount of “outstanding rent” is a question of fact. It may be reduced by an agreement between the former landlord and tenant that a tenancy deposit will be retained in satisfaction of rent arrears.

The assessment should also allow for a set-off which the claimant proves would probably succeed in civil proceedings for recovery of rent. Decision-makers should reject unfocussed allegations against a landlord, but must determine a properly evidenced set-off. Costs incurred by a landlord, including eviction costs, do not increase outstanding rent unless the tenancy makes them rent.

The claimant had been evicted from an assured shorthold tenancy. In 2014, the local authority revised her earlier housing-benefit award and paid the underpayment to her former landlord under regulation 96(1)(c) of the Housing Benefit Regulations 2006, on the basis that rent arrears remained outstanding.

She contended that the landlord had retained her £1,200 tenancy deposit to meet those arrears. The First-tier Tribunal dismissed her appeal, treating the deposit as incapable of reducing outstanding rent and finding insufficient evidence that it had been used for rent. She appealed to the Upper Tribunal.

The central issue was whether retention of a tenancy deposit, and any available set-off, could reduce the outstanding rent for regulation 96 purposes.

1. Appeal allowed. The First-tier Tribunal’s decision involved an error of law and was set aside under section 12(2) of the Tribunals, Courts and Enforcement Act 2007. The Upper Tribunal re-made the decision.

2. Regulation 96(1)(c) of the Housing Benefit Regulations 2006 does not give a free-standing power to pay benefit to a former landlord. The claimant must have ceased to reside in the dwelling and there must be outstanding rent. The payment is capped at the amount actually outstanding.

3. Outstanding rent is a factual matter. Former landlord and tenant may agree the rent owing between them. The tenancy-deposit legislation did not prevent an agreement, in the case of an insurance-backed scheme, that the landlord would retain a deposit on account of rent arrears. The First-tier Tribunal therefore erred in treating the deposit as categorically irrelevant.

4. The Upper Tribunal found that the parties had agreed the £1,200 deposit would be retained for rent arrears. It also held that the assessment of outstanding rent must account for a set-off which the claimant would probably establish in a civil action for arrears. The claimant bears the burden of proving such a set-off.

5. The claimant could not set off cleaning costs, television-licence payments, or the alleged value of tools. However, she could set off £46.40 for water charges paid for the post-eviction period, because that was expenditure incurred at the landlord’s request to discharge an obligation of his. Eviction-related costs could not be added to rent, as the tenancy did not define them as rent.

6. The outstanding rent was £101.16. That sum was payable to the former landlord under regulation 96(1)(c); the remaining £764.22 of the housing-benefit award was payable to the claimant.

• Upper Tribunal (Administrative Appeals Chamber): Allowed the claimant’s appeal, set aside the First-tier Tribunal’s decision for error of law, and re-made the decision.

• First-tier Tribunal: On 16 December 2014, dismissed the claimant’s appeal against the local authority’s decision to pay her housing-benefit underpayment to her former landlord.