LAW REPORT : Mortgage interest housing costs restricted

Kaur and Chief Adjudication Officer; Court of Appeal (Lord Justice Stuart-Smith, Lord Justice Morritt and Lord Justice Ward) 22 June 1995

The major change of circumstances which disapplied the restriction on the amount of housing benefit payable under income support for mortgage costs had to occur after the restriction was applied, namely after the claim for benefit was made. Therefore a husband leaving home before the wife applied for housing benefit could not amount to such a change.

The Court of Appeal (Lord Justice Ward dissenting) dismissed an appeal by the claimant against the social security commissioner's decision that the amount payable under income support for housing costs should be restricted.

In 1990 the claimant and her husband occupied a house as secure tenants. The husband claimed income support and received pounds 50 housing benefit for the rent. On 4 January 1991 they accepted a mortgage offer to purchase the house. On 3 February 1991 the husband left the country and when he returned in April lived separately from the claimant. The claimant applied for income support on 3 February and received it from 20 February. In July she claimed the mortgage interest repayments of pounds 88.85 per week. The adjudication officer restricted the amount under paragraph 10(1) of the Income Support (General) Regulations 1987 to the amount of housing benefit that had been payable prior to the acquisition of the property backdated to 20 February.

The Social Security Appeal Tribunal allowed the claimant's appeal, holding that it was wrong to impose a restriction because the claimant's separation from her husband was a major change of circumstances within paragraph 10(2)(b) of Schedule 3 to the Regulations which disapplied the restrictions on mortgage interest payments imposed under paragraph 10(1). The adjudication officer then successfully appealed to the commissioner who decided that the major change of circumstances had to occur after the restriction applied, which was from 20 February.

The claimant appealed submitting that, first, there was no power under paragraph 10(1) to apply the restriction where the property was acquired before the date when the claimant applied for income support and, second, the commissioner was wrong to hold that the major change of circumstances had to occur after the restriction had been applied.

Natalie Lieven (David Thomas) for the claimant; Richard McManus (DSS solicitor) for the adjudication officer.

Lord Justice Ward said that paragraph 10(1) provided that those who were in occupation with security of tenure and then acquired an interest in the property but who were in receipt of income support at the moment of acquisition should be restricted in the amount of housing costs so that they did not put themselves in a better position than they were as tenants in receipt of a lesser amount of housing benefit. The claimant's first submission could not be accepted.

Turning to the second submission the proper meaning of paragraph 10(2)(b) was that the duty under paragraph 10(1) initially to apply the restriction on mortgage interest should cease to apply if its application became inappropriate by reason of any major change in the circumstances of the family affecting their ability to pay the mortgage interest. The adjudicating officer and tribunal were able to judge whether the change was major and affected the family's ability to pay. That is what they did. The commissioner was wrong. The appeal would be allowed.

Lord Justice Morritt said that there was nothing in paragraph 10(1) to require that the claim must be made before the interest in the property was acquired. The first submission failed.

It was plain that the major change of circumstance in paragraph 10(2)(b) must follow some event. Sub-paragraph (1) could not apply until a claim was made for housing costs as an adjunct to income support. Only then could there be "aggregate amounts so applicable" capable of being restricted. The commissioner was right. The appeal would be dismissed.

Lord Justice Stuart-Smith agreed with Lord Justices Morritt and Ward that the first submission failed. As to the second submission, agreeing with Lord Justice Morritt, a necessary condition for the application of paragraph 10(1) was that there should have been a claim for income support. The natural construction of paragraph 10(2)(b) was that what ceased to apply in the event of a major change of circumstances was the restriction. The restriction first applied on 20 February. The appeal was dismissed.