I have clients that are living in a leasehold property that is owned by their son and daughter - it was purchased for them to enable them to move closer to the family and they live there rent free but pay all the costs and amenity charges.

There are substantial service charges to pay as a condition of occupying the property because the scheme is sheltered with a full time on-site manager and all the associated alarm services, lifts, communal maintenance etc.

My query is whether the service charge should be considered as part of a Housing Benefit claim or whether it would be a housing cost on a Pension Credit claim?

Any advice or help appreciated......................

The son and daughter would be legally liable for the service charge as the leaseholders. I don't think your clients could claim it as an eligible housing cost on their Pension Credit for this reason (not sure if there is any simple legal mechanism for assigning liability).

The easiest way to claim would have been for the son and daughter to charge your clients rent (which would cover the costs mentioned) and they could then have claimed Housing Benefit. As long as the rent charged was reasonable then HB should cover anything that wasn't specifically ineligible (eg. support related services that would come under Supporting People). There may even be scope for the son and daughter to charge just a basic rent and exclude the service charges if they decided to accept liability to pay them. They would have to be careful that such an arrangement wasn't deemed contrived or non-commercial.

This might also be an issue if your clients have lived in this accommodation for a while and the agreement then changes as the Council might argue that this was done to take advantage of the HB scheme. But this provision should only be used where there is some sort of abuse. The arrangement you describe is quite a common one, but such informal arrangements between family members often leave people in a Catch-22 situation, unable to claim the costs under HB or PC. A reasonable HB department would possibly accept the payments your clients make as rent (or similar) anyway (if there was evidence of payments being made), despite what they may have called it as this is what they effectively are. I think the confusion usually arises because both sides get wrapped up in arguments about who is legally liable for the service charge rather than the real nature of the payments being exchanged between the two parties.

All the above may be affected by other factors to do with contrivance and non-commerciality, whether your clients pay the service charge to their son and daughter or direct to the Management Company etc, but I think HB is the only route to recoup these costs. Interested if anyone has any differing views because I have come across a few of these cases in the past. These have all been genuine, non dodgy arrangements which have been complicated by the same ambiguities.

Your clients liability is not under a long tenancy as that is owned by the daughter.

There seems to me to be no doubt that your client does have a liability to pay those charges to the daughter and so in my view there can be no doubt that the service charge ought to be met by HB provided it is otherwise eligible and not an inelible charge that would be met by supporting people.

Whilst Findlay cites R v Bristol CC ex p Jacobs to suggest that payments made as a consequence of use and occupation of a dwelling should be given a restricted meaning, there are a number of Commissioners decisions that hold otherwise.

I dont think there is any doubt that provided the charge is listed as an eligble charge under Reg 12 and not listed as an ineligible service charge under Sch1, it can be met by HB. Indeed in ex p Jacobs Owen J accepted that:

“a person can be liable to make more than one class of payment specified in 10(1). There seems to me no possibility of dispute over this."

We've just published a briefcase summary that examines the issue of the eligibility of service charges - CH/528/2006

There's a parralell discussion in Pension Credit which has reached the opposite conclusion, and I believe that Housing 21 is advising his/her clients to claim PC housing costs.

Have a look, I'm now inclined to the view that these charges could arguably be met by either benefit. But on the facts of this case as I understand them (the clients have been paying them to the freholder direct for some time and now want to know if they can claim benefit to cover these payments) for the reasons I set out in PC I think it is safer to claim them under PC.