House of Lords

Published June 16, 2009

Hanoman v Southwark London Borough Council (No 2)

Before Lord Phillips of Worth Matravers, Lord Hoffmann, Lord Scott of Foscote, Lord Rodger of Earlsferry and Lord Brown of Eaton-under-Heywood

Speeches June 10, 2009

The requirement that a local authority which had delayed processing a right-to-buy claim should deduct from the purchase price the purchasing tenant’s rent payments during the period of delay applied where the tenant’s rent had been paid for him in the form of housing benefit.

The House of Lords so held in dismissing an appeal by Southwark London Borough Council from the Court of Appeal (Sir Anthony Clarke, Master of the Rolls, Lady Justice Arden and Lord Justice Jacob) (The Times June 24, 2008; \ 1 WLR 374) who had allowed an appeal by the tenant, Colin Hanoman, from the refusal by Judge Simpson, at the Mayor’s and City of London County Court, of his claim for a declaration to that effect.

The tenant, whose rent had been paid out of housing benefit, had sought to exercise his right under Part V of the Housing Act 1985 to buy from the council a long lease of his flat at the discounted purchase price of £17,000.

The council had failed to execute the lease within the prescribed period and the tenant served upon it an operative notice of delay under section 153A(5) of the 1985 Act, as inserted by section 124 of the Housing Act 1988. By section 153B, as similarly inserted, such a notice obliged the council to deduct from the purchase price “payments of rent” made during the period of the delay.

The council had refused to reduce the purchase price to the appropriate nil amount claimed by the tenant, maintaining that the housing benefit payments made on his behalf during the relevant period did not count as payments of rent.

Mr Christopher Heather for the council; Mr Richard Drabble, QC and Mr Dominic Preston for the tenant.

LORD SCOTT said that the issue was what constituted a payment of rent for the purposes of section 153B, or, more particularly, whether the crediting to a tenant’s rent account of housing benefit was a “payment of rent” for those purposes.

The purpose of section 153B was, the council submitted, to compensate a tenant for having had to pay rent during the period of delay, not to provide the tenant with a windfall by restoring to him something he had never had.

In the context of section 153B, it had argued, the word “payment” contemplated the movement of money from the tenant to the landlord. Moreover, the payment had to be a payment of “rent”. Housing benefit was not “rent” and the application of housing benefit in reduction of rent did not transform it into rent.

His Lordship held that the word “payment” varied with the context in which it was used. The purpose of sections 153A and 153B was to provide a sanction that penalised any local authority that dragged its feet and delayed giving effect to a tenant’s attempts to exercise his or her right to buy.

The literal and limited meaning sought to be attributed to “payment of rent” in section 153B would enable a local authority to avoid that sanction where the tenant desirous of exercising the right to buy was entitled to housing benefit. That construction would fail to give effect to the purpose of the sections.

Accordingly, the crediting of housing benefit to the rent account of a local authority tenant was a payment of rent for the purposes of section 153B.

Lord Phillips, Lord Hoffmann, Lord Rodger and Lord Brown agreed.

Solicitors: Mrs Deborah Collins, Southwark; Glazer Delmar, Peckham.

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