Chapter 9: Eligible and Ineligible Service Charges

Managing Housing Benefit Claims in Supported Housing | Part B: The Case Law

The law

9.1 Schedule 1 and the “adequate accommodation” test

When a service charge counts as rent. Housing Benefit is payable on “payments of, or by way of, service charges payment of which is a condition on which the right to occupy the dwelling depends” (regulation 12(1)(e)). “Services” means “services performed or facilities (including the use of furniture) provided for, or rights made available to, the occupier of a dwelling” (regulation 12(8)). In exempt accommodation, the same wording applies through the old form of regulation 12 preserved by Schedule 3 to the Consequential Provisions Regulations 2006 (Carlisle City Council v SC [2011] UKUT 480 (AAC)).

The exclusions. Schedule 1, para 1 makes the following service charges ineligible:

Para	Ineligible charges
1(a)	Day-to-day living expenses, including meals, laundry (other than premises or equipment for tenants to do their own), leisure items, cleaning of rooms and windows (except communal areas, and exterior windows tenants cannot clean themselves) and transport
1(b)	Acquiring furniture or household equipment, or using it where it will become the claimant’s property
1(c)	An emergency alarm system
1(d)	Medical expenses, including treatment or counselling related to mental disorder, learning disability, physical disability or alcohol or drug dependence
1(e)	Nursing care or personal care
1(f)	“General counselling or of any other support services, whoever provides those services”
1(g)	Any other services “not connected with the provision of adequate accommodation”

Fuel for the claimant’s own accommodation is ineligible. Fuel for communal areas is eligible (Schedule 1, Part 2, para 5).

Communal areas. “Communal areas” means areas of common access, such as halls and passageways, and, in sheltered accommodation, rooms of common use (Schedule 1, para 8). “Sheltered accommodation” is “an inherently flexible concept”. In Oxford City Council v Basey [2012] EWCA Civ 115, a shared house for people with learning disabilities was sheltered accommodation, so the cost of fuel for, and cleaning of, its common rooms was eligible (paras 33 and 34). Communal water charges in sheltered or supported housing are also eligible (Liverpool City Council v NM and WD [2015] UKUT 532 (AAC), [2016] AACR 19).

What “adequate accommodation” means. Paragraph 1(g) is the test for any service not dealt with by paras 1(a) to (f):

• “a common sense view must be taken of the notion of adequate accommodation”. Where tenants have the right to use premises beyond their own dwelling, such as gardens, grounds and walkways, services related to the adequacy of those premises should be accepted as connected with the provision of adequate accommodation (CIS/1460/1995, Appendix, para 15)
• the question “should not be confined to the character of the accommodation, but should take account of the personal needs of the residents”. How far personal needs count is “a matter of fact” in each case (CIS/1460/1995, Appendix, para 17)

The council’s powers. Schedule 1, paras 3 and 4 give the council four powers:

• Apportion an ineligible charge that is not separately identified, “as is fairly attributable to the provision of that service, having regard to the cost of comparable services” (para 3(1))
• Substitute a higher figure where a separately identified ineligible charge is unreasonably low for the service (para 3(2))
• Deduct the whole amount of an ineligible charge in any other case (para 3(4))
• Reduce an eligible charge that is “excessive in relation to the service provided”, having regard to the cost of comparable services (para 4)

The council can look behind the labels. The council does not have to accept the itemisation of a service charge as the landlord presents it. Paragraph 3 gives it an express power to apportion a larger charge so that only the eligible parts are met (ET v Rossendale BC [2010] UKUT 222 (AAC) (CH/3677/2008), para 19).

Tenancy terms matter. In Wigan Council’s appeal [2009] UKUT 28 (AAC) (CH/1615/2008), a “support charge” for a sleep-in room used by overnight carers was rent, because the evidence showed that the tenancy was intended to cover the whole house. The Upper Tribunal held that the tenancy agreement’s wording could be departed from only on evidence strong enough to obtain rectification (para 31). Tenancy agreements should describe accurately what the tenant occupies and what each charge is for.

9.2 No automatic link between exempt status and service charge eligibility: Allerdale

Chapter 7 (7.2) covers Allerdale BC v JD and Others [2019] UKUT 304 (AAC) in detail. For service charges, four points matter.

Two questions, different purposes. Whether a charge is excluded by Schedule 1 and whether the accommodation is exempt are separate questions, and the two provisions have “fundamentally different purposes” (paras 12 and 30). A service can be eligible and also count towards exempt status. A charge can be ineligible without the accommodation losing exempt status.

What Schedule 1 is for. Read with its history, para 1 is “less concerned” with adequate accommodation as such than with identifying services whose cost should be met by the tenant or from public funds other than Housing Benefit (para 24).

What the 2003 change excluded. From April 2000 to April 2003, a transitional scheme made some general counselling and other support services eligible. That eligibility was removed “clearly advisedly” in 2003 (paras 26 and 27), and the end of Supporting People funding does not change that (para 28). SHP’s position is that what was removed was counselling and support provided to the tenant as a person. The landlord’s own housing management, including housing-related support and supervision that bears on the accommodation and the tenancy, was never part of that change and remains eligible (Chapter 7, 7.2).

Housing management is still eligible. What housing management involves “will differ according to the attributes and needs of those being housed” (para 25). Rent collection, including chasing arrears and liaising with appointees, was “a proper part of housing management” and eligible. Routine help with Housing Benefit claims was “a normal part of housing management” (para 31).

The practical line. SHP reads Allerdale as drawing a line between:

• managing the tenancy and the property, including the building’s security and safety, rent collection, arrears, Housing Benefit, repairs and enforcing tenancy conditions, and the housing-related support and supervision that go with them, such as tenancy sustainment, enhanced repairs, welfare and property checks and on-call cover, which is housing management and eligible, even where it takes longer because of the tenants’ needs
• care, counselling and personal support to the person, such as emotional support, life skills, budgeting help other than with Housing Benefit, training, education and employment support, medication reminders and family liaison, which is ineligible

That is SHP’s position, and it matches SHP’s published view that “care” and “personal support” are not eligible, while housing-related support and supervision bearing on the accommodation and the tenant’s occupation are (supportedhousing.blog). Allerdale decided three disputed items on their own evidence, and the line will not always be easy to draw. Where it is unclear, apportionment is the answer (9.3).

9.3 Apportioning mixed charges: staff time, IHM, maintenance, overheads

The duty to apportion. Where an ineligible service is not separately identified, the council must apportion the charge “as is fairly attributable to the provision of that service” (Schedule 1, para 3(1)). It cannot simply disallow the whole charge because part of it is ineligible.

Staff time. Most supported housing service charges are mainly staff costs. The case law expects “sufficiently detailed evidence of the amount of time devoted by staff to providing the service under consideration”, because until one knows what staff are doing and for how long, “it is often impossible to know whether the charge for that service is eligible in principle … and, if so, whether that charge is excessive” (ET v Rossendale, para 20, discussing R(IS) 2/07).

The method. ET v Rossendale (para 39) sets out a model that both sides can use:

1. A proper charge for the administration and management of an eligible service is itself eligible.
2. That charge should be based on the cost of the staff time involved: the total cost of employing the staff, apportioned by the hours they spend on the service.
3. To support the figure, the landlord should provide job descriptions, the hours each person works, what they do during the time attributed to the service and the rest of their time, and how the percentage was worked out.

IHM charges. An intensive or enhanced housing management charge should be broken down activity by activity, with the staff time for each. Each activity is then treated as housing management (eligible) or support (ineligible). In Allerdale, the parties agreed the treatment of 85% of the charge between themselves, and the Upper Tribunal took a “broad-brush approach” to the rest because the evidence was slight (para 31).

Maintenance. Repairs and maintenance of the dwelling and communal areas are housing costs and normally part of the rent or an eligible service charge. More frequent repairs because of the tenants’ needs remain maintenance.

Overheads and voids. Where a percentage mark-up for management overheads or voids is applied to every line of a charge, and part of the charge turns out to be ineligible, the mark-up on that part is ineligible too, pro rata (Allerdale, paras 37 and 38, agreeing with Carlisle CC v SC). The Upper Tribunal noted that the landlord could only be judged on how its charges were “presently structured” (para 37). Landlords that allocate overheads on a reasoned basis, to the activities that actually generate them, are in a better position than those that apply a flat percentage to everything.

Excessive charges. Under Schedule 1, para 4, an eligible charge can be reduced to the extent that it is excessive for the service. In ET v Rossendale:

• comparable charges must be considered if they exist, but their existence is not a precondition. A charge can be excessive “on the basis of factors relating to the service itself” (paras 28 to 31)
• it was “inherently implausible”, without further evidence, that two managers spent 43.7% of their time managing two security guards. The charge was “manifestly excessive” even without a precise figure for the proper charge (para 36)
• where the claimant is seeking an increase, the burden is on the claimant, and the landlord on their behalf, to show that the charges are eligible. Where they gave no material for a proper figure, the whole disputed element could be disallowed (para 37)

Unreasonably low ineligible charges. Where the landlord shows a separately identified ineligible charge, such as a support charge, that is unreasonably low for the service, the council can substitute its own figure for the value of the service (Schedule 1, para 3(2)). This must be a valuation of the service actually provided. Chapter 3 (3.4.1) explains why it does not justify deducting a notional sum for support that is, in fact, eligible housing management.

9.4 Typical eligible and ineligible items, with commentary

The DWP guidance lists common eligible charges (para 177) and ineligible ones (paras 182 and 184). The table below combines those lists with the case law. It is a guide, not a substitute for looking at what each charge actually pays for.

Item	Usual treatment	Commentary
General housing management, building insurance	Rent, not a service charge (DWP guidance, para 171)	Eligible as part of the core rent
Rent collection, arrears recovery, liaising with appointees	Eligible	Housing management (Allerdale, para 31(b))
Help with claiming and maintaining Housing Benefit	Eligible	Routine help is housing management (Allerdale, para 31(a)). Help with other benefits, and broader correspondence work for the tenant group, is support. See Chapter 3 (3.4.4)
Repairs, maintenance and safety checks of the dwelling and communal areas	Eligible	Communal maintenance is eligible (DWP guidance, para 177)
Communal cleaning, fuel, lighting and water	Eligible	Schedule 1, paras 1(a)(iv) and 5; Basey; Liverpool CC v NM
Cleaning, fuel and water for the claimant’s own room	Ineligible	Cleaning: day-to-day living expenses (para 1(a)). Fuel: Schedule 1, Part 2, paras 5 and 6. Water: deducted from the eligible rent by floor area, unless the tenant pays the water company directly (alternative regulation 12(3)(a) and (6)(b) for exempt accommodation, regulation 12B(5) otherwise; Liverpool CC v NM, paras 36 to 38)
Concierge, caretaker or warden	Eligible for the proportion of time spent on accommodation-related services	DWP guidance, paras 177 and 180; ET v Rossendale. Watch for the same service being charged twice under two names (para 180)
Secure building access: door entry, key cards, CCTV	Eligible	DWP guidance, para 177
Emergency alarm system	Ineligible	Schedule 1, para 1(c)
Furniture and white goods that remain the landlord’s	Eligible	Schedule 1, para 1(b), excludes only furniture that will become the claimant’s
Meals	Ineligible, at the fixed amounts in Schedule 1, para 2	Day-to-day living expense
Laundry service	Ineligible, except communal laundry premises and equipment	Schedule 1, para 1(a)(ii). Apportion any part of a water charge used by a communal laundry (Liverpool CC v NM)
TV licence, leisure, transport (of residents)	Ineligible	Schedule 1, para 1(a)
Counselling, emotional support, life skills, training, education, employment, language skills and other personal support	Ineligible	Schedule 1, paras 1(d) and 1(f); Allerdale, paras 26 and 27
Housing-related support and supervision: tenancy sustainment, welfare and property checks, intervention in disputes, on-call cover	Eligible (SHP’s position)	Housing management judged against the tenant group (Allerdale, paras 25 and 31); Chapter 7, 7.2
Personal care, nursing care	Ineligible	Schedule 1, para 1(e)
Staff office or sleep-in room	Depends on its use and the tenancy	A room used for support is ineligible (DWP guidance, para 176). A room used for housing management can be apportioned. A sleep-in room within the tenant’s tenancy can be rent (Wigan [2009] UKUT 28 (AAC))
Sinking funds	Depends on their purpose	Ask what the fund is for, and whether it is rent or a service charge (DWP guidance, paras 172 and 173)
Management overheads	Eligible to the extent they relate to eligible services	ET v Rossendale, para 39(b); Allerdale, para 37
Voids and bad debts	Part of the rent where reasonable and evidenced	CH/3548/2006. Chapter 10 covers the amount

The guidance

The DWP guidance covers service charges at paras 166 to 193.

Para	What the guidance says	SHP’s view
168	Ask for a rent breakdown on a new claim or a rent increase	Agreed. A good breakdown is the starting point (9.3)
169 to 171	The tests for eligibility, and the definition of a service	Consistent with regulation 12 and Schedule 1
174	Services that make it possible to occupy the accommodation but do not affect its condition are not eligible, including “help with claiming benefits”	Partly. Allerdale holds that routine help with Housing Benefit is housing management and eligible. Help with other benefits is personal support (Chapter 3, 3.4.4)
176	All support services, related staff costs, and rooms used for support are ineligible	Correct for care and personal support. Staff costs and rooms used for housing management, including housing-related support and supervision, are eligible, apportioned
177 to 180	Common eligible charges; concierge, caretaker or warden by proportion of time; duplicate charges	Agreed, and consistent with ET v Rossendale
181	Reduce an excessive eligible charge, comparing with other comparable services in the area, and give a rationale	Agreed, with one addition: comparables are not a precondition (ET v Rossendale, paras 28 to 31)
182 to 185	The list of ineligible charges and day-to-day living expenses	Consistent with Schedule 1. Some footnotes in this section appear to cite the wrong sub-paragraph of Schedule 1, so cite the regulations directly
186 to 188	All charges for medical expenses, care, counselling and support are ineligible; identify the funding of all CSS	Correct for ineligible care and support. Chapter 3 (3.4.1) covers para 187’s notional deduction
189	The history of IHM and the 2000 to 2003 transitional scheme	Accurate as history. SHP’s position is that it concerns counselling and support to the tenant as a person, not housing-related support delivered as housing management (Chapter 7, 7.2)
190	Break down IHM charges and deduct ineligible or duplicate items. Charges for services that help meet the CSS requirement “must be ineligible”	The first two sentences are good practice. The last does not reflect Allerdale (Chapter 7, The guidance; Chapter 3, 3.4.1)
192 and 193	Deduct specified ineligible charges in full, substitute a value where they are unreasonably low, and apportion unspecified ones	Consistent with Schedule 1, para 3

Good practice

SHP’s position. Service charge disputes are best settled by evidence, not by labels. A charge called “intensive housing management” is not ineligible because of its name, and a charge called “property services” is not eligible because of its name. What matters is what each activity is, who does it, how long it takes and what it costs. The overheads and management costs of eligible services are eligible.

For councils:

• Ask for a breakdown of every charge, activity by activity, with staff time, before deciding eligibility.
• Decide eligibility item by item. Don’t disallow a whole charge because part of it is ineligible; apportion instead (Schedule 1, para 3(1)).
• Treat housing management tailored to the tenant group as housing management. Treat care, counselling and personal support to the person as ineligible. Treat housing-related support and supervision delivered as housing management as eligible.
• Apply mark-ups pro rata, following Allerdale, rather than disallowing all overheads.
• Where a charge seems excessive, explain why, using comparables where they exist and the facts of the service where they don’t.
• Check for duplication between the core rent and the service charges.

For providers:

• Keep the core rent, eligible service charges and ineligible charges separate in the breakdown.
• Break IHM and staffing charges down by activity, with the hours and cost of each.
• Allocate overheads on a reasoned basis to the activities that generate them, and explain the method.
• Be ready to provide job descriptions, rotas and time records (ET v Rossendale, para 39).
• Make sure the tenancy agreement accurately describes what the tenant occupies and pays for.
• Don’t include support, counselling or personal care in eligible charges. Fund them from another source, or show them as ineligible.

Evidence

Reasonable evidence for service charges will usually include:

Evidence	Purpose
The tenancy or licence agreement	Shows that payment is a condition of occupation, and what the tenant occupies
A full rent and service charge breakdown	Separates core rent, eligible and ineligible charges
An activity-by-activity breakdown of staffing and IHM charges, with hours	Allows eligibility to be decided item by item
Job descriptions and rotas for the staff whose costs are charged	Supports the apportionment of staff time (ET v Rossendale, para 39)
The basis for overhead, voids and bad debt allowances	Shows how mark-ups are applied
Contracts and invoices for bought-in services	Shows actual cost, for the excessive charges test
Comparables, where they exist	Helps decide whether a charge is excessive

Chapter 13 covers scheme-level evidence and rent build-ups. Appendix 8 is a model rent and service charge build-up with an apportionment worksheet.

Finding common ground

Agree the breakdown first. Allerdale shows how much can be settled by agreement: the parties agreed 85% of a complex charge between themselves, leaving the Upper Tribunal three small items to decide (para 31).

Use a shared template. A standard breakdown format, agreed locally, saves time on both sides and makes like-for-like comparison easier. Appendix 8 provides one.

Agree the line. Most items fall clearly on one side of the line between managing the tenancy or property, including housing-related support and supervision, and providing care or personal support to the person. Agree those first, then focus on the few that are genuinely mixed.

Use broad-brush apportionment where the evidence is limited. The Upper Tribunal did so in Allerdale. An agreed, reasonable split is better for both sides than a long dispute over small percentages.

Key cases and cross-references

Case	Point	Chapter
Allerdale BC v JD and Others [2019] UKUT 304 (AAC)	No automatic link with exempt status; counselling and personal support to the tenant ineligible since 2003; housing management judged against the tenant group; mark-ups pro rata	3, 7, 9
ET v Rossendale BC [2010] UKUT 222 (AAC) (CH/3677/2008)	Councils can look behind itemisation; staff time evidence; management of an eligible service is eligible; excessive charges and comparables; burden of proof	9, 10
Carlisle City Council v SC [2011] UKUT 480 (AAC)	Old form of regulation 12 in exempt accommodation; support funded elsewhere is not eligible; mark-ups pro rata	7, 9
CIS/1460/1995	Common sense meaning of adequate accommodation; personal needs relevant; apportionment	9
Oxford City Council v Basey [2012] EWCA Civ 115	Broad meaning of sheltered accommodation; communal rooms	9
Liverpool City Council v NM and WD [2015] UKUT 532 (AAC), [2016] AACR 19	Communal water charges in sheltered or supported housing	9
Wigan Council’s appeal [2009] UKUT 28 (AAC) (CH/1615/2008)	Sleep-in room within the tenancy is rent; tenancy wording	9
CH/3548/2006	Voids are fact-specific	9, 10

• Related chapters: Chapter 3 (3.4.1, 3.4.3 and 3.4.4); Chapter 7 (IHM and maintenance); Chapter 10 (reasonableness of rent and service charges); Chapter 13 (scheme-level evidence)
• Appendices: Appendix 1 (table of cases); Appendix 2 (extracts from the legislation); Appendix 8 (rent and service charge build-up)

Sources

• Housing Benefit Regulations 2006, Schedule 1: https://www.legislation.gov.uk/uksi/2006/213/schedule/1
• Housing Benefit Regulations 2006, regulation 12: https://www.legislation.gov.uk/uksi/2006/213/regulation/12
• DWP guidance for supported housing claims, paras 166 to 193: https://www.gov.uk/government/publications/housing-benefit-guidance-for-supported-housing-claims/housing-benefit-guidance-for-supported-housing-claims
• Allerdale BC v JD and Others [2019] UKUT 304 (AAC): https://assets.publishing.service.gov.uk/media/5dca92caed915d4e8517d9ab/CH_28_31_34_36_2019-00.pdf
• ET v Rossendale BC [2010] UKUT 222 (AAC): https://hbinfo.org/wp-content/uploads/ch_3677_2008.doc
• Carlisle City Council v SC [2011] UKUT 480 (AAC): https://hbinfo.org/wp-content/uploads/ukut480-2011_0.rtf
• CIS/1460/1995: https://www.casemine.com/judgement/uk/5a8ff7e860d03e7f57eb2c3d
• JB v Oxford City Council [2011] UKUT 136 (AAC): https://administrativeappeals.decisions.tribunals.gov.uk/judgmentfiles/j3234/CH%200322%202010-00.doc
• Oxford City Council v Basey [2012] EWCA Civ 115, summary: https://gardencourtchambers.co.uk/2012-02-welfare-benefits/
• Liverpool City Council v NM and WD [2016] AACR 19: https://administrativeappeals.decisions.tribunals.gov.uk/judgmentfiles/j4679/%5B2016%5D%20AACR%2019ws.doc
• Wigan Council’s appeal [2009] UKUT 28 (AAC): https://hbinfo.org/wp-content/uploads/caselaw/ch_1615_2008.doc

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