Managing Housing Benefit Claims in Supported Housing | Part E: Tools and Appendices
This appendix turns Chapter 11 into a working checklist. Councils can use it to decide whether a scheme needs closer enquiry under regulation 9(1)(l) of the Housing Benefit Regulations 2006, and to record the facts and judgment if it does. Providers can use it to check their own arrangements and to prepare the evidence that shows genuine independence. It has six parts:
- Part A: questions to answer before contrivance
- Part B: risk indicators
- Part C: features of a genuine arrangement
- Part D: what the indicators do not show
- Part E: weighing the indicators and recording the decision
- Part F: worked example, comparing two lease-based schemes
The law in brief.
- The test. A claimant is treated as not liable for rent where the council “is satisfied that the liability was created to take advantage of the housing benefit scheme” (regulation 9(1)(l)). If it applies, the claim fails altogether (Chapter 11, 11.1).
- Abuse, not arrangement. There must be “something in the nature of an abuse of the scheme”. Arranging matters so that the exempt accommodation rules apply is not enough (Salford City Council v PF [2009] UKUT 150 (AAC), para 53).
- Genuine need is not abuse. Letting only to tenants with a genuine need for support, with a view to a higher eligible rent, “is not an abuse” (Salford, para 66).
- Facts, then judgment. The decision-maker finds the facts, then makes an evaluative judgment on the arrangement as a whole, focused on the time the liability was created (FYE v Middlesbrough City Council and GPZ v Sunderland City Council [2026] UKUT 157 (AAC), paras 16, 25 and 26).
- Profit is not essential. “What matters is that public funds are spent unnecessarily or inappropriately” (FYE, para 42).
- Valid paperwork is not a defence. The question is why a real liability was created (Chapter 11, 11.5).
SHP’s position. Contrivance is the right tool for the arrangements used by a significant number of often property and/or investor-led landlords to exploit supported housing, and the wrong tool for genuine providers whose schemes rely on Housing Benefit. The indicators below are reasons to ask questions, not findings. Most genuine schemes will show none of the high-weight indicators, and will be able to explain any others quickly with evidence (SHP, The End of the Property-Led Exempt Accommodation Contrivance?).
Using the checklist. Councils should start with public sources and the scheme file (Chapter 13), and ask for further information only where an indicator is present and the information is “reasonably required” (regulation 86; Chapter 12; Appendix 9). Each indicator is given a weight:
| Weight | Meaning |
|---|---|
| High | Goes to the heart of the arrangement. In FYE, one such fact was enough on its own (First-tier Tribunal, para 114, accepted by the Upper Tribunal at para 59) |
| Medium | Significant, especially in combination with other indicators |
| Low | Common in genuine schemes; relevant only alongside other indicators |
Part A: Questions to answer before contrivance
Contrivance applies only where none of the other parts of regulation 9(1) do, and it is the most serious finding a council can make on a claim. Other questions often deal with the concern more directly and should be answered first (Chapter 10, 10.11; Chapter 11, 11.3).
| No. | Question | Chapter |
|---|---|---|
| 1 | Is the landlord a qualifying body, such as a housing association, registered charity or voluntary organisation? | 5 |
| 2 | Is the landlord really the landlord, or a managing agent for a profit-making owner? (DWP guidance, para 132) | 5 |
| 3 | Does the landlord, or someone on its behalf, provide care, support or supervision that is more than minimal? | 6 to 8 |
| 4 | Are the service charges eligible? | 9 |
| 5 | Is the rent reasonable, or should it be restricted? | 10 |
| 6 | Only then: was the liability created to take advantage of the scheme? | 11 |
The steps are not watertight. In FYE, contrivance was decisive and the support issue did not need deciding (paras 4 and 59). But a council that goes straight to contrivance without considering steps 1 to 5 risks using the wrong tool.
Part B: Risk indicators
Record a finding against each indicator: N (not present), E (present, explained by evidence) or C (present, concern remains).
B1. Financial model and funding of support
| Code | Indicator | Weight and source | Evidence to check | Finding |
|---|---|---|---|---|
| B1.1 | The provider has no source of income for support other than payments from the property owner or a connected company | High. FYE, First-tier Tribunal paras 113 and 114 | Accounts; funding statement; support contracts | |
| B1.2 | The model must keep growing, for example by taking on more properties, to stay solvent | High. FYE, First-tier Tribunal para 114 | Accounts; cash flow; business plan | |
| B1.3 | The provider depends on loans or “donations” from the landlord, developer or connected parties | High. FYE, para 15(c) and (d) | Accounts, related party notes; loan agreements | |
| B1.4 | Money paid out under the head lease comes back to the provider to fund support, so that support may be paid for twice | High. Salford, para 96; FYE, para 15(d) | Accounts; head lease; donation or grant agreements | |
| B1.5 | The provider cannot explain how support that is not eligible for Housing Benefit is funded | Medium. SHP blog (above) | Funding statement | |
| B1.6 | The scheme would not be viable if the eligible rent were reduced to a reasonable level | Medium. SHP blog (above) | Rent build-up; accounts |
B2. Rent setting
| Code | Indicator | Weight and source | Evidence to check | Finding |
|---|---|---|---|---|
| B2.1 | Rent set by dividing the head lease rent by the number of units, not from the cost of providing the accommodation | High. FYE, para 15(g); Salford, paras 93 and 94 | Rent and service charge build-up (Appendix 8) | |
| B2.2 | Rent significantly higher than reasonably necessary to cover costs | High. Salford, para 62 | Build-up; accounts; comparators (Chapter 10) | |
| B2.3 | Rent justified by notional borrowing over an unreasonably short term or at an unreasonably high rate | Medium. Salford, para 63 | Build-up; any loan or finance assumptions | |
| B2.4 | Rents well above local supported housing levels, without an explanation in costs or services | Medium. Chapter 10 | Comparators; build-up | |
| B2.5 | Tenants charged £15 to £20 a week for ineligible “support” to qualify as exempt, alongside a high lease charge | Medium. Chapter 11, 11.6 | Tenancy agreement; charges schedule |
B3. Lease terms and property
| Code | Indicator | Weight and source | Evidence to check | Finding |
|---|---|---|---|---|
| B3.1 | Long leases with no break clause, full repairing and insuring terms, and uplifts that pass all the risk to the provider | Medium. FYE, para 14; DWP guidance, paras 126 to 128 | Head lease | |
| B3.2 | Head lease rent very high relative to the property’s value | Medium. Salford, para 94 (more than 11% of capital value) | Head lease; Land Registry price paid; valuation | |
| B3.3 | Property sold on between connected companies at a large uplift before being leased | High. FYE, para 14 | Land Registry title and price paid; Companies House | |
| B3.4 | Lease terms give the owner control over rents, lettings or services, leaving the provider without a landlord’s usual freedom | Medium. DWP guidance, paras 130 and 132 (also a managing agent question, Part A step 2) | Head lease; management agreement | |
| B3.5 | Lease negotiated without independent advice for the provider | Low. Chapter 11, Good practice | Board minutes; advice obtained |
B4. Connected parties and governance
| Code | Indicator | Weight and source | Evidence to check | Finding |
|---|---|---|---|---|
| B4.1 | The same people control, fund and profit from the provider, the property owner and other linked companies | High. FYE, para 15(a); DWP guidance, para 131 | Companies House officers and people with significant control; Charity Commission | |
| B4.2 | Payments to trustees or directors, or a charity or CIC run like a private company | High. FYE, para 15(f) | Accounts; Charity Commission; constitution | |
| B4.3 | Significant profits made by connected individuals or companies at public expense | High. FYE, para 15(e) | Accounts of connected companies | |
| B4.4 | No conflict of interest policy, or conflicts not declared or managed | Medium. DWP guidance, para 131 | Policy; register of interests; board minutes | |
| B4.5 | Property agencies, investment companies, care companies and providers intertwined, or a property agency creating or controlling a provider | Medium. SHP blog (above) | Companies House; websites; marketing material to investors |
B5. Support and lettings
| Code | Indicator | Weight and source | Evidence to check | Finding |
|---|---|---|---|---|
| B5.1 | Tenants without a genuine need for support, suggesting they were selected to unlock exempt status | High. FYE, para 15(h) and (i); Salford, para 68 | Referrals; needs assessments (Appendix 6) | |
| B5.2 | Support not provided as described, or weak or token support | Medium. FYE, para 15(h) and (i); SHP blog (above) | Support plans; activity records (Appendix 7) | |
| B5.3 | Support that exists mainly to qualify as exempt, rather than to meet assessed needs | Medium. SHP blog (above) | Service description; support plans | |
| B5.4 | Rapid growth in properties or tenants without a clear social purpose or referral route | Low. SHP blog (above) | Number of units over time; referral sources |
Part C: Features of a genuine arrangement
These features do not prevent a finding of contrivance, but they are strong evidence against one. Providers should be able to show them; councils should give them proper weight.
| Code | Feature | Source | Evidence |
|---|---|---|---|
| C1 | Real financial and organisational independence from the property owner, with arm’s length relationships | FYE, para 11; Wirral BC v MF [2013] UKUT 291 (AAC) | Companies House; accounts; conflict of interest register |
| C2 | Lease negotiated in the provider’s interests, with independent advice, break clauses and a fair share of risk | DWP guidance, paras 126 to 133 | Head lease; board minutes |
| C3 | Rent built up from the actual cost of providing the accommodation and services | Salford, paras 54 and 60; Appendix 8 | Rent and service charge build-up |
| C4 | A lawful, sustainable funding model for any ineligible support, such as commissioned contracts, grants or fundraising | Chapter 11, 11.6 | Funding statement; contracts |
| C5 | Needs assessed before tenants move in, through a council-approved or professional referral route | Chapter 14; Appendix 6 | Referrals; assessments |
| C6 | Support documented, tailored and delivered | Chapter 15; Appendix 7 | Support plans; activity records |
| C7 | Independent trustees or directors, managed conflicts and no disguised profit distribution | FYE, para 15(f) | Constitution; accounts; minutes |
| C8 | Good governance and financial viability, as DWP describes for legitimate lease-based schemes | DWP guidance, para 133 | Accounts; regulator judgments, where registered |
| C9 | Openness: lease, accounts and funding model shared at the start of the relationship | Chapter 11, Finding common ground | Scheme file |
Part D: What the indicators do not show
The following are not evidence of contrivance on their own. A decision that relies on them alone would be wrong in law.
- The scheme relies on Housing Benefit. Most supported housing does (Salford, para 66; Chapter 11, 11.6). SHP’s position is that Housing Benefit-only funding is not contrivance.
- The scheme is lease-based. There is “in principle nothing objectionable about that model” (FYE, para 11; DWP guidance, para 133).
- A lessor or contractor makes a commercial profit under a genuine arm’s length arrangement (Wirral BC v MF).
- The rent is higher than general needs rent, where it reflects the genuine higher costs of supported housing (Salford, paras 54 and 60).
- The provider deliberately set the scheme up as exempt accommodation (Salford, para 53).
- The scheme is not commissioned. Commissioning is not a condition of exempt status (Chapter 4, 4.2).
- A single low-weight indicator, such as rapid growth, without more.
Part E: Weighing the indicators and recording the decision
E1. When closer enquiry is justified. As a guide, closer enquiry is justified where any high-weight indicator is marked C, or where several medium-weight indicators are marked C and together suggest that the arrangement, rather than tenants’ needs, explains the liability. This is SHP advice, not a legal threshold.
E2. The process.
| Order | What to do | Source |
|---|---|---|
| 1 | Answer the Part A questions first | Chapter 11, 11.3 |
| 2 | Use public sources: Companies House, the Charity Commission, the Regulator of Social Housing and Land Registry | DWP guidance, para 131 |
| 3 | Request only the further information that is reasonably required, explaining why | Regulation 86; Appendix 9 |
| 4 | Find the facts, with the evidence for each, on the balance of probabilities | FYE, paras 25 and 35 |
| 5 | Put the concerns to the claimant and, with consent, the provider, and consider the response | Chapter 11, 11.6 |
| 6 | Consider whether another tool deals with the concern more proportionately; if the evidence shows contrivance, regulation 9(1)(l) applies | Salford, para 58 |
| 7 | Make the evaluative judgment on the arrangement as a whole, at the time the liability was created | FYE, paras 16 and 26 |
| 8 | Before any refusal takes effect, involve housing options and commissioners to protect tenants | Chapter 11, 11.6 |
| 9 | Notify each tenant, with reasons and appeal rights | Chapter 19; Appendix 10 |
E3. Decision record.
| Field | Entry |
|---|---|
| Scheme, provider and property owner | |
| Date the liabilities under review were created | |
| Part A questions: outcome of each | |
| Indicators marked C, with the evidence for each | |
| Indicators marked E, and the explanation accepted | |
| Part C features present | |
| Concerns put to the claimant and provider, date, and response | |
| Other tools considered, and why they do or do not deal with the concern | |
| Evaluative judgment, with reasons, on the arrangement as a whole | |
| Plan for tenants | |
| Decision-maker and date |
Part F: Worked example
Both schemes are fictional. Each has five-bedroom shared houses for single homeless people, leased from a private owner and with a similar rent. They show how the same model can be genuine in one case and contrived in another.
| Feature | Scheme A | Scheme B |
|---|---|---|
| Provider | Registered charity with independent trustees, operating for 12 years | CIC set up 18 months ago; its director is also a director of the property owner |
| Property | Owned by an unconnected private landlord since 2015 | Bought by one company and sold the same month to a connected company at a 60% uplift, then leased |
| Lease | Ten years, break clause at year five, CPI uplift with a cap, landlord responsible for structural repairs | 25 years, no break clause, full repairing and insuring, uplifts of RPI plus 1% |
| Rent setting | Built up from costs (Appendix 8 model) | Head lease rent divided by five, plus a fixed “management fee” |
| Funding of ineligible support | Commissioned floating support and charitable fundraising | Annual “donation” from the property owner, without which the CIC would be insolvent |
| Referrals | Council-approved referral route; needs assessed before move-in | Self-referrals and referrals from a property agency; no assessments on file |
| Governance | Conflict of interest policy; no payments to trustees | Director’s fees paid by the CIC; no conflict register |
| Indicators marked C | None. B3.1 and B5.4 marked E | B1.1, B1.3, B1.4, B2.1, B3.1, B3.3, B4.1, B4.2, B5.1 |
| Outcome | No contrivance enquiry needed. Ordinary scheme review (Chapter 13) | Closer enquiry justified. Part A steps 2 and 3 should be considered first, then the evaluative judgment under regulation 9(1)(l) |
In Scheme B, the funding of support from the owner’s donation alone mirrors the fact found sufficient in FYE (First-tier Tribunal, para 114). The council would still need to find the facts on evidence, put its concerns to the tenants and the provider, and make the judgment on the arrangement as a whole.
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