In the fourth part of our series on contract management pitfalls, we look at the risks arising out of varying the terms of construction contracts.
Welfare Reform: Regulations
In June a number of draft Regulations and Explanatory Memorandums were published by the Social Security Advisory Committee. The Regulations set out more detailed provisions in relation to:
- the housing benefit cap that will apply from April 2013: as expected this is set at £500 per week (£26,000 per year) for couples and lone parents, and £350 per week (£18,200 per year) for single people without children; and
- universal credit and personal independence payments generally, and more specifically on claims and payments and decision-making and appeals. The Regulations set out many of the key details as to how the new system will work, including expanding on the conditions for claims, capital and income thresholds, bedroom allowance, and sanctions for when the claimant does not meet Claimant Commitment conditions.
These documents are available from the Department for Work & Pensions website. They are subject to further changes and consultation. At this time there is still no exemption for supported accommodation.
Alongside the issues for landlords that have already been well publicised to date, a further unexpected issue has arisen: service charges that will be covered by the housing allowance element of universal credit. Under the present regime, as long as a service does not fall within the list of “ineligible services” it will be covered by housing benefit. However under the draft Regulations (paragraph 31 of Schedule 4) only the following services will be covered:
- services necessary to maintain the fabric of the accommodation: it is not exactly clear what this means and how wide this provision will be interpreted;
- cleaning of communal areas; and
- cleaning of exterior of windows where members of the household are unable to clean them.
As drafted (do bear in mind the Regulations may change) services such as concierge services and grounds maintenance may not be covered. This will obviously have an impact for those landlords who currently charge for a wide range of services or those looking to introduce service charges.
Housing Allowance: Discrimination by Size Criteria - A Cautionary Tale for Welfare Reform?
A Court Of Appeal decision last month decided that housing allowance rules regarding bedroom size criteria were discriminatory against those who were severely disabled and needed an additional room due to their disability. As well as having an immediate impact on people with severe disabilities and who are in receipt of housing allowance, this decision is also a cautionary tale in light of the operation of universal credit under the Welfare Reform Act and the controversial “bedroom tax” provisions.
The Court of Appeal heard three appeals from the Upper Tribunal:
- Mr Burnip against Birmingham City Council: Under the rules relevant at that time Mr Burnip was not entitled to extra rent allowance to cover an additional bedroom needed for an overnight carer, required because of his disability.
- Lucy Trengove against Walsall Metropolitan Council: Miss Trengove was in a similar position to Mr Burnip. She had unfortunately passed away by the time the proceedings were heard so the case was bought by her personal representative.
- Richard Gorry against Wiltshire Council: Mr Gorry lived in a four bedroomed property with his wife and three daughters. His 10 year old daughter has Downs Syndrome and his 8 year old daughter has disabilities relating to Spina Bifida. The housing allowance rules were applied on the basis that they could share a single bedroom and did not take account of the fact that they needed separate bedrooms because of their disabilities.
In each case the Secretary of State for Work and Pensions was also a Respondent, as the organisation with responsibility for the legislation and regulations. The Equality and Human Rights Commission was an intervener.
In each case the individuals were in private rented accommodation so were awarded local housing allowance rather than housing benefit. In each case the rules at that time did not allow for an additional allowance to be made for the extra bedrooms that were needed. Each individual argued that they were discriminated against under Article 14 of the European Convention of Human Rights.
The Court of Appeal held that in each case the individuals were discriminated against by the maintenance of the single bedroom rule. It also held there was no justification to the discrimination as it was not a fair or proportionate response.
The Court of Appeal asked the Secretary of State to rectify the discrimination. In relation to Mr Burnip and Miss Trengove the legislation had already been changed to reflect this point. However, in Mr Gorry’s case the legislation still does not take account of disabled children: the Secretary of State will need to look at this.
Initially there is an obvious impact in similar cases, where housing allowance was limited and did not take account of the need for an extra bedroom where families have disabled children.
We anticipate claims could be backdated as a result of these decisions, but ultimately this is for the Secretary of State to decide.
However this decision also raises additional questions in relation to the new universal credit rules that will be introduced under the Welfare Reform Act from next year. Neither the Act nor the draft Regulations published cover an extra bedroom that families with disabled children need. This means that the amount that they receive under universal credit for housing will be limited and probably not sufficient to cover rent charged. These cases increases pressure on the Government to address this point to avoid future similar discrimination claims.
To assist landlords in preparing for the changes, the Chartered Institute of Housing have published a useful toolkit ‘Making it fit: a guide to preparing for the social sector size criteria’. This toolkit sets out practical guidance and helpful case studies specifically focusing on under-occupation and the implications of the ‘bedroom tax’, and is available here.
For more information
If you would like to discuss these updates in more detail or welfare reform generally, please contact Emma Duke on 0121 214 3617, firstname.lastname@example.org.
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