Affordability Assessment and Reasonable Living Expenses: EWCA Upholds AHAS Guidance in Homelessness Determination

Introduction

The case of Baptie v The Royal Borough of Kingston Upon Thames ([2022] EWCA Civ 888) addresses a pivotal issue in housing law: the criteria and methodologies used by Local Housing Authorities (LHAs) to determine whether an applicant for homelessness assistance has become homeless intentionally. Central to this determination is the assessment of an applicant's affordability concerning rent and reasonable living expenses. Ms. Taryn Baptie, a lone parent evicted due to rent arrears, challenged the LHA's decision, arguing that the assessment of her reasonable living expenses was conducted irrationally. This appeal examines the Court of Appeal's stance on the use of the Association of Housing Advice Services (AHAS) guidance in affordability assessments and the proper consideration of benefit caps.

Summary of the Judgment

Ms. Baptie, after being evicted from her tenancy with London and Quadrant Housing Association due to unpaid rent, sought assistance from the Royal Borough of Kingston Upon Thames. The Council classified her as intentionally homeless, asserting that her rent was affordable given her income and reasonable living expenses. The County Court initially sided partially with Ms. Baptie, finding the LHA's assessment of her living expenses unlawful based on its reliance on AHAS guidance and failure to consider the benefit cap. However, upon appeal, the England and Wales Court of Appeal overturned the County Court's decision. The appellate court held that the reviewing officer's use of the AHAS guidance was lawful and that the benefit cap did not necessitate the specific "sanity check" proposed by the County Court Judge. Consequently, the Court of Appeal upheld the LHA's original decision, dismissing Ms. Baptie's appeal.

Analysis

Precedents Cited

The judgment extensively references several key cases and statutory provisions that shape the legal framework for homelessness assessments:

Samuels v Birmingham City Council [2019] UKSC 98: This Supreme Court decision underscored the necessity for objective assessments of reasonable living expenses, emphasizing that subjective evaluations by case officers are insufficient.
Patel v Hackney LBC [2021] EWCA Civ 897: This case clarified the relationship between statutory tests for reasonable living expenses and the guidance provided by housing codes, reinforcing the importance of objective measures.
Paley v Waltham Forest LBC [2022] EWCA Civ 112: This decision highlighted the necessity for LHAs to conduct thorough assessments of an applicant's real needs and to consider all relevant information in affordability assessments.
Danesh v Kensington & Chelsea RLBC [2006] EWCA Civ 1404: This case reinforced the principle that public law assessments by LHAs must adhere to legal standards without delving into merits reviews.

These precedents collectively emphasize the judiciary's expectation for LHAs to employ objective, evidence-based methodologies in assessing applicants' financial situations, particularly concerning affordability calculations.

Legal Reasoning

The Court of Appeal's legal reasoning centered on several critical aspects:

Use of AHAS Guidance: The Court held that the reviewing officer was within her rights to utilize the AHAS guidance in determining reasonable living expenses. Contrary to the County Court Judge's assertion, the AHAS guidance was deemed an objective, evidence-based resource tailored to the London context, thus aligning with statutory requirements.
Benefit Cap Consideration: The appellate court found that the Judge's insistence on the reviewing officer using the benefit cap as a "sanity check" was misplaced. The Court reasoned that while the benefit cap is relevant at the initial stage of determining available income, it does not mandate using the capped amount as a benchmark for assessing living expenses.
Interpretation of Statutory Guidance: The Court differentiated between the 2006 and 2018 versions of the Homelessness Code of Guidance. It noted that the 2018 guidance provided a more flexible framework, allowing LHAs to consider Universal Credit standard allowances without treating them as obligatory benchmarks.
Objective Assessment Requirement: Aligning with Samuels, the Court affirmed that affordability assessments must rely on objective criteria rather than subjective evaluations, ensuring fairness and consistency in LHA decisions.

Ultimately, the Court concluded that the reviewing officer's methodology was lawful and did not breach any legal standards, thereby dismissing Ms. Baptie's appeal.

Impact

This judgment has profound implications for future homelessness cases and the broader landscape of housing law:

Affirmation of AHAS Guidance: The Court's decision legitimizes the use of AHAS guidance as a reliable tool for LHAs in assessing reasonable living expenses, provided it is applied objectively and contextually.
Clarification on Benefit Caps: The ruling delineates the appropriate role of benefit caps in affordability assessments, affirming that while they influence the determination of available income, they do not serve as direct benchmarks for living expenses.
Maintaining Objective Assessments: The judgment reinforces the necessity for LHAs to base their decisions on objective evidence rather than subjective judgments, promoting consistency and fairness in housing assistance determinations.
Guidance for Future Appeals: The Court of Appeal's approach provides a clear framework for evaluating the legality of LHA decisions in similar contexts, offering guidance for both LHAs and appellants on acceptable assessment practices.

Overall, the decision strengthens the procedural safeguards ensuring that homelessness determinations are made based on objective, evidence-based criteria, thereby enhancing the integrity of the housing assistance system.

Complex Concepts Simplified

1. Intentional Homelessness

Definition: Under Section 191(1) of the Housing Act 1996, intentional homelessness occurs when an individual deliberately does or fails to do something that results in them ceasing to occupy accommodation that was available and reasonable for them to continue occupying.

Implications: If deemed intentionally homeless, an applicant faces less stringent assistance from the LHA, focusing primarily on temporary help and advice rather than securing long-term accommodation.

2. AHAS Guidance

Description: The Association of Housing Advice Services (AHAS) provides non-statutory guidance to caseworkers and LHAs, outlining methodologies for calculating reasonable living expenses. This guidance is evidence-based, reflecting average costs of living in London.

Role in Assessments: AHAS guidance serves as a tool for LHAs to objectively determine what constitutes reasonable living expenses, ensuring consistency and fairness in affordability assessments.

3. Benefit Cap

Definition: The benefit cap limits the total amount of welfare benefits that a household can receive. Introduced by the Welfare Reform Act 2012 and subsequently amended, the cap is set at a specific annual amount (£23,000 as per the 2016 Act for Greater London).

Relevance in Assessments: The benefit cap affects the total income available to a household, influencing the determination of whether rent is affordable. However, as clarified in the judgment, it does not directly dictate the assessment of reasonable living expenses.

4. Reasonable Living Expenses

Definition: These are expenses deemed necessary for maintaining a minimum standard of living, excluding housing costs. They cover essentials such as food, clothing, utilities, and other basic needs.

Assessment Criteria: Reasonable living expenses must be objectively determined based on evidence and guidance, ensuring they reflect the actual needs of the applicant and their household.

5. Universal Credit

Description: Universal Credit is a welfare benefit in the UK that merges several existing benefits into a single monthly payment. It includes a standard allowance and additional elements based on factors like age, disability, and the number of children.

Impact on Affordability Assessments: While Universal Credit provides a standardized income support mechanism, its role in affordability assessments is nuanced. The Court clarified that Universal Credit standard allowances may guide but do not rigidly define reasonable living expenses.

Conclusion

The Court of Appeal's decision in Baptie v The Royal Borough of Kingston Upon Thames reaffirms the legitimacy of using AHAS guidance in assessing reasonable living expenses within affordability determinations for homelessness assistance. By upholding the reviewing officer's methodology, the court emphasizes the necessity for objective, evidence-based assessments that consider regional cost variations and statutory frameworks. This judgment serves as a crucial reference point for LHAs, ensuring that future assessments align with legal standards and promote fair treatment of applicants.

Furthermore, the clarification regarding the benefit cap's role delineates its appropriate application in evaluating available income without overshadowing the objective determination of living expenses. As housing law continues to evolve, this case underscores the judiciary's role in balancing regulatory guidance with statutory mandates to uphold fairness and justice in homelessness determinations.