London borough failed to assess affordability correctly when offering Stoke property to homeless family, Court of Appeal rules

A London borough failed to make a proper assessment of the affordability of a property in Stoke-on-Trent it offered to a claimant in the purported discharge of its duty to provide her and her children with suitable accommodation, the Court of Appeal has ruled.

The case of Paley v London Borough of Waltham Forest [2022] EWCA Civ 112 was a second appeal from an order made by HHJ Rawlings on 7 September 2020 whereby he dismissed the appeal of the appellant, Lisa Paley, against the decision of Waltham Forest to offer her the accommodation in Stoke-on-Trent in order to bring to an end its main housing duty under s 193(2) of the Housing Act 1996 (HA 1996).

The issue before the Court of Appeal was whether, upon a correct application of judicial review principles, the local authority made proper inquiries and conducted an appropriate objective assessment of the affordability of the property offered.

A single parent of four children aged between five and 21, Ms Paley had lived in Waltham Forest for 35 years until August 2016 when she was evicted because her landlord wished to sell the privately rented property in which she and the children had lived for eight years.

The appellant presented to Waltham Forest Council as homeless and the family was placed in temporary accommodation in Bexley.

In June 2017, the local authority accepted that it owed Ms Paley a full housing duty under s 193(2) HA 1996, under the 'main homelessness duty'.

On 4 November 2019, the discretionary housing payments which were being made to Ms Paley came to an end leaving a shortfall in her weekly budget. As a consequence, she accrued significant rent arrears in relation to the temporary accommodation in Bexley.

As the accommodation in Bexley was temporary, in order for Waltham Forest to discharge its duty to bring to an end its main homelessness duty under s 193(2) HA 1996, it had to provide adequate accommodation for Ms Paley, suitable for her long-term housing needs.

Ms Paley, who had lived all her life in a particular area of London, wished to remain in that locality.

In January 2020 Waltham Forest wrote to her saying that 'after careful consideration of your circumstances, the council has decided to bring the duty under s193(2) to an end by arranging an offer of an assured shorthold tenancy in the private sector with a fixed term of 24 months.'

The property offered to Ms Paley was a flat in Stoke-on-Trent in Staffordshire, 161 miles outside the local authority area.

In February 2020 she sent a request for a review under s.202 of the Housing Act 1996.

A review officer subsequently concluded that the offer of the Stoke property was suitable in terms of affordability, distance, location and size and was reasonable given the appellant’s circumstances.

In May 2020 Ms Paley lodged an appeal against the review decision of the local authority under s 204 Housing Act 1996 on the basis of 10 grounds. The appeal was unsuccessful on all 10 grounds and ultimately dismissed by His Honour Judge Rawlings.

Ms Paley was given permission to appeal in this second appeal on two grounds:

Ground 1: The appellant sought to appeal the finding that the right to make submissions in support of a request for reconsideration, constitutes any/reasonable inquiries, sufficient to satisfy the respondent's duties.

Ground 2: The appellant sought to appeal the finding that an affordability exercise can ever be conducted properly where figures are prepared without the appellant's input.

Further, or in the alternative, the appellant sought to appeal the finding that an affordability exercise is deemed to have been conducted properly, in circumstances where an appellant does not challenge the respondent's figures when raising a request for a reconsideration; alternatively, that it is insufficient for an appellant to raise the issue of affordability, generally.

Lady Justice King said that on the facts of the case Ground 1 was bound to fail. She said: “As Brooke LJ said in Cramp, the court should be hesitant indeed to find that there has been an error of law in circumstances where the reviewing officer was never invited to consider a matter now relied upon by the applicant.”

In relation to Ground 2, the appellant's counsel submitted that when put into judicial review terms, there was an error of law in that no affordability assessment should take place without direct input from the applicant and that in any event no reasonable authority could on any objective assessment have concluded that the Stoke property was affordable.

HHJ Rawlings had disagreed with that analysis, concluding in his judgment that the reviewing officer was not in error because Ms Paley had not suggested at the appeal below that the figures were inaccurate and that she 'ought to have done so'. It was, the judge said, appropriate to assess affordability on the updated figures, particularly as Ms Paley was now in receipt of universal credit.

HHJ Rawlings held that in those circumstances he was not satisfied that it was 'wrong for the respondent, in the Review decision to base affordability upon the January 2020 financial assessment, rather than the out of date financial information contained in the ANF [Accommodation Needs Form].'

Lady Justice King said: "In my view, both the local authority (and subsequently the judge) fell into error in this respect as, putting it in the terms of the alternative formulation of Ground 2 of the Grounds of Appeal, they each wrongly approached the determination of affordability on the basis that 'an affordability exercise is deemed to have been conducted properly in circumstances where an appellant does not challenge the Respondent's figures when raising a request for a reconsideration.'"

Had the reviewing officer critically considered the assessment upon which affordability was in large part to be determined, it is hard to see how she would have reached the conclusion that she did, the Court of Appeal judge said.

Applying judicial review principles, whilst Ms Paley was in a far less strong position to challenge an affordability assessment, having failed to provide updated figures or to challenge the figures which became available upon disclosure of her housing file, the fact remained that the local authority had, as was said in Patel, to conduct an objective enquiry into the needs of the particular applicant and his or her family, Lady Justice King added.

She said: "The local authority had Ms Paley's July 2019 budget. In the replacement budget, they simply took out the debt and public transport items expenditure which in themselves came to significantly more than the figure of £50 described as 'other' in their budget and which, if paid, would leave nothing for clothing or any of the other basic but inevitable exigencies of life."

Lady Justice King said the review process was carefully crafted to give applicants a full opportunity to engage in and challenge the process by which a property is deemed to be suitable for him or her. "Applicants undoubtedly do not help themselves if they fail to engage fully in the process, but it would be wholly unrealistic to make the lawfulness of the assessment of affordability dependant on the direct input of the applicant upon the affordability exercise."

The Court of Appeal judge said an applicant must be given the opportunity to be involved at the various stages of the process, but if that applicant fails in whole or part to provide input, then providing they have been given that opportunity and the local authority engage in an objective evidence-based assessment of affordability relevant to the particular applicant, the local authority will not be susceptible to challenge.

"In my judgment they failed to do so in Ms Paley's case," she said.

Lady Justice King continued:

84. In my judgment the local authority failed to prepare a budget by reference to the needs of this particular applicant and failed to pay due regard to the 1996 Order [The Homelessness (Suitability of Accommodation) Order 1996/3204] and the 2018 Code [Homeless Code of Guidance for Local Authorities 2018]. Far from there being sufficient flexibility in the budget to allow, for example, routine but frugal use of public transport and the occasional visit to her family, the affordability budget provided by the local authority was inevitably going to plunge Ms Paley even further into debt and as a consequence, to put her and her children at risk of once again being rendered homeless. This time however, she would be deemed to be intentionally homeless, the Stoke property having been determined to have been affordable and the main housing duty thereby discharged. The global un-itemised figure of £50 a week identified as 'other' could not begin to cover Ms Paley's reasonable expenses no matter how modest the level upon which they were calculated.

85. No one underestimates the profound difficulties faced by local housing authorities in finding suitable accommodation for those people to whom they owe a main housing duty. But there has been a proper recognition of the equally significant impact on families moved from their settled local area to the other end of the country where rents are cheaper than those in London. As, however, the CAB said in their response to the review, just because a property is less unaffordable than a property in London, that does not mean that it is affordable.

86. It follows that in my judgment the local authority failed to take relevant matters into account in determining whether the property was affordable and in my judgment, no reasonable authority could on any objective assessment of the budget prepared in January 2020 and set out at para [48] above, have concluded that the Stoke property was affordable and as a consequence, I would allow the appeal on Ground 2.

Lady Justice King said it followed therefore "that: (i) the appeal in relation to Ground 1: the reasonableness of the inquiries made by the local authority is dismissed and (ii) the appeal in relation to Ground 2, the approach of the local authority to the affordability exercise is allowed, the local authority having wrongly deemed the affordability exercise to have been conducted properly in absence of a specific challenge to the figures by Ms Paley.”

In a postscript, Lady Justice King revealed that Ms Paley and the children had not settled in Stoke and had relocated back to the south of England where they were presently living in privately rented accommodation.

Waltham Forest submitted that the appeal should not have been pursued. It was, the council suggested, academic given that Ms Paley and the children were no longer living in the house in question.

Counsel for the appellant explained that that was not the case, and that a successful appeal in respect of 'affordability' meant that the local authority had not discharged its main housing duty in providing the Stoke property. The importance of that for Ms Paley’s family, counsel said, was that the local authority had as a consequence, still to satisfy its s193(2) HA 1996 duty, either by way of conducting a proper affordability assessment, and/or by identifying an alternative affordable property. “For so long as they fail to do so, Ms Paley's decision to leave the Stoke property cannot result in a finding by the local authority that she is intentionally homeless with all the attendant adverse consequences of such an outcome.”

Lady Justice Asplin and Mr Justice Francis agreed.