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......................

Have a look at para 13 of Schedule II of the State Pension Credit regs - this is the one that deals with "other housing costs" which can be paid with SPC - other than loans to buy or improve the home, that is. This includes ground rents and service charges. There are some deductions which are the same as ineligible service charges under housing benefit (ie, food, laundry,leisure items,cleaning of the inside of the flat itself, buying furniture from the landlord, transport, provision of an emergency alarm system,, medical services, nursing or personal care, counselling and support services and any other service not directly concerned with the provision of adequate accommodation).
For a service charge to be payable as part of HB it must be a term of the agreement between the owner of the property and the occupier that it has to be paid. For PC (like IS and IBJSA), the claimant must be "liable to meet" the costs in resepct of the dwelling.

With whom is the agreement that the occupiers will pay this cost? The lease is not in the name of the occupiers, and issues of privity of contract may arise if the occupiers are not parties to the agreement and thus not under a liability to pay. What are the terms of the lease? What is the agreement between the occupiers and the freeholder or service company?

Fri 21-Mar-08 07:38 AM by paul__moorhouse

I agree with Ariadne that this these are PC housing costs not rent for HB.

But I'm not so sure that the contractual issues are so important.

CSB/213/1987 established that liability to pay housing costs should not be equated with legal liability.

Even if Ariadne's argument holds sway then para 3 (b) of Schedule II of the SPC regulations says housing costs are eligible if 'the person liable to meet the housing costs is not meeting them, the claimant has to meet those costs in order to continue to live in the dwelling occupied as the home and it is reasonable in all the circumstances to treat the claimant as liable to meet those costs' the costs are eligible.

Obviously there is the test of reaonableness to overcome, but I get the impression from the original posting that your clients have been living there for some time and been paying the charges, the only issue is whether they continue to pay them out of their own pockets or are able to claim PC to help them meet the costs.

If this has been a reaonsably long standing arrangement, and there has never been an understanding that the leasholders could or should meet these houing costs, I would have thought you had a good argument that taken together with the fact that the claimants moved there in order to get care and support from the family it is 'reasonable in all the circumstances' to treat them as liable.

Just posted a reply to the same query on the HB board. I felt HB would be the appropriate route (albeit with probable problems if they've been living there for a while) but open to persuasion otherwise. Obviously the best option would be to get it right at the start of the agreement but that is not always possible.

Do you think there is any requirement that the "person liable to meet the housing costs is not meeting them" proviso connotes some kind of refusal to pay rather than just establishing that they are not in fact paying them? If not then this would be a better route than HB, particularly if there is no formal agreement set up between your clients and their son and daughter.

GAD, I've read your HB posting, and think that, precisely because it will look like (indeed would arguably be!) a 'contrived' arrangement if the leaseholders suddenly started charging rent the HB route could be very problematic.

I think that the fact that the arrangement seems to have been set up this way and in my view meets all the staturoty tests for PC housing costs without the any of the parties apparently being aware of them, argues strongly against any suggestion that it was entered into in order to increase benefit entitlement. (Though this depends on Housing 21 confirming my reading of the chronology)

I think that 'not meeting' the housing costs should be interpretted on its common meaning. The analagous phrasing in old IS regs 'abandoned partners' regulation, was 'cannot or will not pay' them, which is wider than mere refusal, and this is, I think, wider still and should catch this case because the leasholders have never paid, and have no intention (or possibly ability) to pay these charges.

Thanks for all the advice - I will go the PC route and argue appropriately as necessary.