Housing duties and offers of private rented sector accommodation

What makes private rented sector accommodation offered to homeless applicants "suitable"? Nicholas Grundy QC and Michael Mullin examine a recent Court of Appeal ruling.

Local Housing Authorities (“LHAs”) have increasingly had the right to use accommodation let by private landlords directly to homeless applicants to meet their housing duties under the Housing Act 1997, Part 7, ‘Homelessness’. For example, LHAs can use private sector accommodation to meet an interim housing duty or to cause the main housing duty to cease. This raises concerns about the quality of the accommodation, the character of the landlord and the terms of the tenancy granted to the applicant. Article 3 of the Homelessness (Suitability of Accommodation) (England) Order 2012 ("Art. 3") makes provision to meet these concerns.

Art. 3 provides that accommodation is not to be regarded as suitable accommodation if:

(1) The LHA is of the view that it is not in a reasonable physical condition;

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(2) The LHA is of the view that electrical equipment in it does not meet the requirements of the Electrical Equipment (Safety) Regs 2016, Sch 1;

(3) The LHA is of the view that the landlord has not taken reasonable fire safety precautions in relation to the accommodation;

(4) The LHA is of the view that the landlord has not taken reasonable precautions to prevent carbon monoxide poisoning;

(5) The LHA is of the view that the landlord is not a fit and proper person to act in the capacity of a landlord;

(6)  & (7) The accommodation is an unlicensed HMO;

(8) The accommodation does not have a valid energy performance certificate (epc);

(9) The accommodation does not have a current gas safety certificate; and

(10) The landlord has not provided the LHA with a written tenancy agreement which the landlord proposes to grant the applicant.

If the accommodation is not suitable it cannot be used as a Private Rented Sector Offer (“PRSO”) to cause the main housing duty to cease.

It will be noted that some of the requirements of Art. 3 require the LHA to ‘form a view’ about the subject matter of the requirement, others are absolute, and the last requires the LHA to have seen an actual document.

What is required of an LHA to establish that Art. 3 has been complied with when a PRSO is challenged as unsuitable on the ground that one or other of the requirements has not been met?

In two joined appeals, Hajjaj v City of Westminster and Akhter v LB Waltham Forest and Akhter v LB Waltham Forest [2021] EWCA Civ 1688 (12 November 2021) the Court of Appeal provided guidance as to how an LHA can comply with Art 3. In order to understand the decision, it is necessary to briefly set out the facts of each case.

The City of Westminster (“CoW”) have an arrangement with the established and well-respected homeless charity St Mungos. St Mungos made Mr Hajjaj an offer of accommodation which CoW approved as a PRSO. There was, however, no evidence of any inspection of the property by or on behalf of CoW nor of compliance with the other requirements of Art 3.

The London Borough of Waltham Forest (“LBWF”) has a joint venture company with Mears Housing, More Homes WF. More Homes WF offered Ms Akhter a tenancy of a flat as a PRSO. On LBWF’s file, there were copies of an inspection of the flat by Mears Housing (which stated that the flat had no gas installations); a fire-safety report and the epc certificate. There was, however, no copy of the tenancy.

In each case, the applicant had asked for a review of the suitability of the accommodation. Mr Hajjaj’s request for review included the following statement:

There does not appear to be any evidence that the criteria set out in Article 3 of the Homelessness (Suitability of Accommodation) (England) Order 2012 have been determined as not applicable. It is a requirement that it is shown that these criteria do not apply and that the offer of private rented accommodation [is] suitable. With these steps not having been taken, the offer of accommodation could not be deemed to [be] suitable for the purposes of Article 3

In contrast, Ms Akhter’s request for review raised the condition of the flat she was offered in the broadest terms and did not ask whether LBWF had had a copy of the tenancy that she was to be granted before the PRSO offer was made.

Guidance for LHAs

The guidance for LHAs as a result of this decision involves a distinction between circumstances where an LHA is approving offers of private tenancy from a landlord with which it has an established relationship and one where it is using a new landlord.

Where an LHA is using an established provider:

  • Have a service agreement that requires the provider to inspect the property and provide evidence that the Art 3 requirements (other than a copy of the tenancy) are met
  • Have standard terms and conditions for the tenancy agreement.

If an LHA is using a new landlord:

  • Arrange an inspection of the property by a Council officer or agent.
  • Have on file the necessary certificates.
  • Obtain a copy of the draft tenancy agreement that the landlord proposes to grant the applicant.

Because of the lack of evidence CoW argued that in relation to the first five requirements of Art 3, which require that the LHA form a view of the relevant matters, could be met even where the authority has no information in relation to those matters; e.g., if the LHA has no information about the condition of the property it will not be ‘of the view that the accommodation is not in a reasonable physical condition’. Where the accommodation is provided by an established provider with a reliable track record; e.g. St Mungos, the LHA is entitled to assume that the property is in a reasonable condition.

The Court of Appeal rejected this submission at [7]:

I accept … that [the LHA] must be satisfied on the basis of evidence rather than assumptions. Taking "reasonable physical condition" as an example, it is not enough to take the view that because the proposed landlord is established and respectable, therefore all properties owned by that landlord should be assumed to be in a reasonable physical condition unless a "red flag" is raised either by the applicant or by some other adverse information which happens to be to hand about the particular property.

In contrast, LBWF was able to argue that it had sufficient evidence of the condition of the flat offered to Ms Akhter to form the necessary views of its condition etc. Insofar as the copy of the tenancy was concerned, LBWF argued that Ms Akhter could not raise that issue on appeal because she had not put it in issue on the review and therefore it was not surprising that no evidence that LBWF had had the tenancy was on the file. In any event, as the tenancy offered to Ms Akhter was through a joint venture vehicle of the Council, it would have been aware of the relevant terms and conditions of that tenancy.

The Court of Appeal accepted LBWF’s submissions at [72]:

I have said that the LHA must be satisfied on the basis of evidence rather than assumptions. This is not, of course, to say that the LHA must have first hand evidence such as could be placed before a jury in a criminal trial. Satisfactory hearsay evidence may be enough. The Mears inspection report of 31 January 2020 in Ms Akhter's case is a good example. The member of Mears' staff who compiled the report had inspected the property, found that save for some minor snagging issues it was fit for occupation the following week, and ticked boxes to show the existence of certain documents. By contrast, in Mr Hajjaj's case, as Mr Peacock rightly conceded, the statement in the offer letter that "I believe the accommodation is in a reasonable physical condition" was simply based on assumptions. So far as we are aware there was no evidence available to Westminster that the property had been inspected at all.

At [75] the court identified the difference between the two cases:

The contrast between these two appeals on the facts is very striking. In Mr Hajjaj's case Westminster simply assumed that because St Mungo's are good landlords the property must be suitable. They had information as to its location and size, but nothing about the physical condition of the property, let alone other matters such as fire safety precautions or an energy performance certificate.They did not obtain any of the evidence about the property of the kind available to the decision-makers at Waltham Forest in Ms Akhter's case.

The Court identified that the position in relation to the tenancy is different to that of the Art 3 conditions in respect of which the LHA is required to form a view. The issue is whether the LHA has to have seen a copy of the tenancy to be granted to the applicant.

The possible outlier among the ten subparagraphs of Article 3(1) is the last one, subparagraph (j). This appears to make it mandatory that the landlord has provided to the LHA "a written tenancy agreement, which the landlord proposes to use for the purposes of a private rented sector offer and which the local housing authority considers to be adequate". We were not shown any umbrella contracts or service agreements between Westminster and St Mungo's. Common sense would suggest that where the letting is to be on the terms of a standard form tenancy agreement, the text of which has been supplied to the LHA, the only remaining information being the name of the tenant, the address of the property, the rent and the duration of the tenancy, it is not necessary for the text to be sent again to the LHA each time a property is to be let. But this issue is not critical to the outcome of either of the present appeals, and it may have to be reargued in a future case.

Nicholas Grundy QC and Michael Mullin are barristers at Five Paper. They appeared in this case for the London Borough of Waltham Forest, instructed by Waltham Forest Legal Services.