In years to come, we may all wonder what all the fuss was about, but Tuesday’s judgement in R (Public Law Project) v the Secretary of State for Justice has provided some relief and not a little amusement to legal aid practitioners girding themselves for yet another grim landmark in the legal aid story: the residence test.
The test, to recap, is intended to exclude from a number of publicly funded services (including housing) those individuals who are not lawfully resident in the UK, Channel Islands, the Isle of Man or a British Overseas Territory and have not at any time been lawfully resident for a period of 12 consecutive months (unless the individual is less than 12 months old or is a category of asylum claimant).
The MoJ’s position on the test was that the government was entitled to implement it by means of delegated legislation (the LASPO Act 2012 (Amendment of Schedule 1) Order 2014), relying in particular on s.9(2)(b) of LASPO (‘The Lord Chancellor may by Order vary or omit services’ in Part 1 of Schedule 1 of the Act) and s.41(2)(b) (Orders ‘may make provision by reference to services provided for a particular class of individual’). Those who find themselves excluded from Part 1 could nevertheless make an application for exceptional funding under s.10 if they could demonstrate a breach of their ECHR or EU rights.
PLP’s challenge to the Order was that it was, firstly, outside the powers permitted to the LC under LASPO and secondly, that it was discriminatory.
Moses LJ gave the lead judgement of the Court and reminds us (at para.37) that Para.1 of Sched.1 of LASPO aims to identify those individuals who have the greatest need for civil legal services. No other criterion is to be found in the statute and the LC cannot vary or omit services which depart from this primary objective (para.40).
So here was the first problem for the MoJ: if legal aid was now only to be targeted at those with a ‘strong connection with the UK’ (Transforming Legal Aid: Next Steps 5/9/13), this was not the express purpose of LASPO. It would therefore be a contradiction to say that those with the greatest need could still be excluded from services because they were not resident in the UK. The statutory provisions on which the MoJ were relying were supplementary to the Act and could not contradict its purpose (e.g. if certain services were no longer needed, they could be omitted, definitions such as domestic violence could be updated and so on).
Moses LJ held that the Order was ultra vires and that the test could not be introduced by secondary legislation.
The Court also had no trouble in finding that the Order was discriminatory and it is worth setting out para.60 in its entirety (if only to explain the title of this post):
- It is and was beyond question that the introduction of such a test is discriminatory. The test is more likely to be satisfied by a United Kingdom national than a national of another member state (a reference to the habitual residence test in Patmalneice v SSWP  1 WLR 783 at paragraph 35). The Government has accepted that it will be “easier for UK citizens to satisfy than other nationals” and that it “falls within the ground of national origin as specified in Article 14″. Indeed, that is its declared purpose. “We have made it absolutely clear”, said the Parliamentary Under-Secretary of State, “that for the residence test it is important that they are our people – that they have some link to this country” (18 March 2014). That is the justification for the test that is proffered, that it is designed to restrict legal assistance to those with a closer connection to the United Kingdom than foreigners. The Lord Chancellor has said as much to the Joint Committee on Human Rights: “I am treating people differently because they are from this country and established in this country or they are not” (26 November 2013). Unrestrained by any courtesy to his opponents, or even by that customary caution to be expected while the court considers its judgment, and unmindful of the independent advocate’s appreciation that it is usually more persuasive to attempt to kick the ball than your opponent’s shins, the Lord Chancellor has reiterated the rationale behind the introduction of the residence test, in the apparent belief that the Parliamentary Under-Secretary had not been as clear as he thought he had been :
“Most right-minded people think it’s wrong that overseas nationals should ever have been able to use our legal aid fund anyway, and when it comes to challenging the action of our troops feelings are particularly strong…We are pushing ahead with proposals which would stop this kind of action and limit legal aid to those who are resident in the UK, and have been for at least a year. We have made some exceptions for certain cases involving particularly vulnerable people, such as refugees who arrive in the UK fleeing persecution elsewhere. But why should you pay the legal bill of people who have never even been to Britain?
And yes, you’ve guessed it. Another group of Left-wing lawyers has taken us to court to try to stop the proposals” (Daily Telegraph 20 April 2014, sixteen days after the argument had been concluded).
The question at this point was whether the discrimination was lawful and justified. Again the MoJ’s case foundered on the argument that the government was not under a duty to provide legal assistance to those who failed the residence test and that it was akin to a welfare benefit. Following Stec v UK and R (Carson) v SSWP, it was settled law that the allocation of state resources was a matter for Parliament and the government and not the Court.
But having already decided which category of cases reached the required threshold under Schedule 1 to justify taxpayers’ subsidy, it was the Court’s view that no comparison could be made with those individuals who did not meet the conditions of welfare benefit entitlement. Those who failed the residence test, to repeat, still fell into the category of those in the greatest need under LASPO.
Discrimination could not be justified by reference to cost saving (para.82) or public confidence in the justice system (para.84). As Moses LJ scathingly expresses it: “Feelings of hostility to the alien or foreigner are common…in the context of a provision relating to legal assistance, invoking public confidence amounts to little more than reliance on public prejudice.”
So whether viewed from the point of view of equal treatment under the common law or Art 14 coupled with Art.6, there was no lawful ground for discriminating between those in the greatest need for legal services under Schedule 1 of LASPO.
The MoJ has quickly indicated its intention to appeal the High Court’s decision and the Lords’ motion booked for later this month has been cancelled pending the appeal.
The LAA has invested a considerable amount of time in readiness for the test’s introduction on 4/8/2014, with online training modules and guidance for practitioners. In this respect, it was important for the Court to highlight one of the more insidious aspects of the test (e.g. at para 30), namely its potential to exclude those who would otherwise pass the test but for the onerous evidential requirements (a dossier of immigration documents, 12 months bank statements to demonstrate continuous residence etc.).
The MoJ conceded that the exceptional funding application form was too unwieldy for all applicants, let alone non-residents, so it is clear that some thought will be required before the residence test re-appears in another guise, whether in primary legislation or otherwise.
I have a vague idea at the back of my mind that the council will give me more information about my LHA tenants if I get the to fill in and sign a form. Anyone know what its called – or am I dreaming? Cheers Allan
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There comes a time for all parents to think “When are they going to leave home?” There also comes a time when all offspring think “When could I leave home?” and “Will bank of mum and dad help me?” The obvious answer for the Buy to Let Portfolio owner is “I’ll buy them a property... Read more
The historic city of Chester is the perfect location for our next student accommodation development Chronicle House and offers circa 8.52% assured NET rental returns for 2 years. Each self-contained studio apartment is fully furnished to the highest of standards. Students will also have access to a range of communal facilities including a fully-equipped gymnasium,... Read more
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If you are buying a commercial property to house your business it can be a difficult to know what is the best way of purchasing it. Do you buy it yourself and rent to the company, or buy it in your business or pension scheme? Which ever way you purchase the property you would think... Read more
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More and more local authorities are introducing selective licensing (SL), claiming a correlation with anti social behaviour (ASB) and/or low rental demand – these are currently the only reasons that councils are allowed to use to introduce selective licensing. The Local Government Association (LGA) are simultaneously campaigning for the right for local authorities to be... Read more
I was talking to Tony Sheldon at LettingSupermarket.com this morning about the increasing number of landlords who are being forced into evicting perfect tenants as the only way to get out of a contract they have with their letting agents. Tony explained that he has conversations with landlords on a daily basis who are so... Read more
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On the day of the Cabinet reshuffle, a day when news has been concentrated on who’s in and who’s out – a report was published by the Department of Work & Pensions on the effect of the ‘Bedroom tax’.
Known officially as the ‘Removal of the Spare Room Subsidy’.
Its an interesting report. I was alerted to it by Nearly Legal who have summarised its findings here.
The report itself can be found here.Some figures
As reported by Nearly Legal:
- Social landlord rent arrears rose by 16% between April – November 2013 (not a time traditionally, when arrears rise)
- The percentage of tenants able to downsize (the main aim of the exercise) – 4.5%
- The number of tenants moving to the more expensive PRS – 1.4%
- The number of tenants in arrears because of the bedroom tax – 59%
There is a lot more, but as you can see, this does not make happy reading.
Well over half of tenants affected by the tax have gone into arrears but only a very small proposition have been able to ‘downsize’.
The main reasons for this are:
- Lack of suitable properties available, and
- Tenants unwilling to move because they do not want to move away from family, schools, support services etc
Moving home is not something to be done lightly. It is one of those big stressful events in peoples lives, up there with divorce, death in the family, changing jobs etc.
It is not something that vulnerable people will be able to tackle easily I suspect, even if the process of finding somewhere else to live was easier. But it isn’t.
The demand for small properties has rocketed. For example, people who before would have been housed in two bedroom properties are now only eligible for one bedroom properties.
This has had an inevitable knock on effect on all the single people looking for this type of home (whose numbers are increasing anyway). There simply are not enough suitable homes for everyone.
Conversely it seems its now much easier for larger families to find homes – indeed apparently some of the larger properties are proving difficult to let.Problems for social landlords
It may be that landlords will be able to adapt the larger properties in due course to split them up or turn them into HMOs. However this will take time and money. Building work is not cheap.
This is another thing that bothers me. That big increase in rent arrears is going to impact seriously on the social landlords’ ability to build new homes and adapt the ones they have for smaller households.
The report says that lenders are not worried about social landlords defaulting on loans (so they won’t go bust), but that does not mean they will have funds available to restructure their housing stock to adapt to the new demands.The final report
This report is just an interim report, and apparently a final report is to be published in 2015. It will be interesting to see what it says.
Although no doubt it will be slipped out quietly, on a day when there is a lot of other news. Like this one.
You can read the full report here.
The Agents Mutual portal has announced that it is to be called On The Market when it launches in 2015.
Although the Agents’ Mutual website this morning still bears the old name, the announcement by the firm - made online - also says the portal has purchased both the .co.uk and .com internet domain names.
As is the norm for a new site launch, it has also purchased ‘type-alike’ names - misspelt versions of the title.
Chief executive Ian Springett says an announcement will be made shortly on who will handle the portal’s public relations; they are currently managed in an ad hoc fashion by agents and staff from two of its six founding companies, Knight Frank and Douglas & Gordon. No details have been given of the new portal's advertising budget or programme.
On The Market will seek to challenge the existing portals, Zoopla and Rightmove, when it launches in January 2015.
- agents mutual
- On The Market
Breathe a sigh of relief - Bank of England governor Mark Carney says there are no new measures which he has left to intervene in the housing market.
Carney, speaking to MPs at the Treasury Select Committee in the Commons yesterday, said it was necessary for the Bank’s Financial Policy Committee to cap mortgages last month because it was not sustainable for house prices to continue rising faster than wages.
The governor explained that the 15 per cent cap on risky loans could be raised and the current cap on loans above 4.5 times income could be modified, but that “we are not currently looking at additional measures”.
However, he did reveal that the Bank is currently analysing individual banks and building societies to see if they could cope with a worst case scenario of a 35 per cent drop in house prices, sharply deteriorating unemployment levels, and a three year recession.
Carney spoke also about buy-to-let in response to one MP’s query about whether there were sufficient constraints on mortgages in that sector of the market. Carney replied: “We are well aware that buy-to-let is a safety value that may need to be released.”
He told members that buy-to-let represented around 15 per cent of all mortgages, in line with long-term averages. He said there had been no shift in underwriting standards with most borrowers making deposits of around 25 per cent, again in line with historic averages.
- housing market
- Bank of England
- Mark Carney
Agents are reporting that even now, many weeks after the introduction, the rigorous and long-winded questioning process at the heart of the Mortgage Market Review is still causing horrendous delays.
This is directly leading to slow transactions, disagreements between vendors, buyers and agents, and ultimately fall-throughs too.
Here is a selection of what agents have told EAT:
A customer applying for a mortgage was questioned about his gambling habit after placing a few bets at the Grand National on one day out. He was required to provide full details and 12 months bank statements about any and all previous gambling instances, so that the bank could understand if he had a gambling habit - Kinleigh Folkard & Hayward.
One of our clients had been given money by their parents to help with a property purchase. They mentioned that some of the deposit was a gift, and it was immediately discounted on the basis that its status couldn’t be verified as a gift as opposed to a loan - Stacks Property Search & Acquisition.
Private finance firms are telling us that MMR is causing problems for high net worth individuals. Even though the buyer may have millions to their name, these funds are often offshore and it is difficult to prove regular income. Couple that with extravagant spending habits and often the computer says No - Robert Bailey Property.
The industry fall-through rate is supposed to be around 30 per cent. In the last 18 months this has fallen to below five per cent. However the impact of the MMR is pushing this right back up again. In the last week alone we have had three deals falter - Roy Brooks.
Two clients meeting with a branch advisor recently had to show a full trail of their bank account statements for deposits as small as £1,000 transferred between their accounts. Gym memberships and service charges for flats are now a huge consideration, with many banks scrutinising payments to ensure affordability. Nationwide has started requesting 12 months bank statements from first time buyers living in rented accommodation, when going through a letting agent - Kinleigh Folkard & Hayward.
Even before MMR we were experiencing lengthy delays and there is no question that we are now feeling the full impact. The days of the mortgage surveyor or even the private surveyor arranging an appointment during the same working week of the instruction are long gone. Since the stealthy introduction of MMR, those delays have increased - Savills.
- housing market
- estate agents
The appointment of Brandon Lewis as housing and planning minister in David Cameron's reshuffle signifies a serious elevation for housing in the current government.
Lewis has been promoted to the position of Minister of State for Housing and Planning, effectively combining the roles of former housing minister Kris Hopkins (pictured) and Nick Boles, the former planning minister who has now been moved to an equalities post elsewhere in government.
It will be interesting to see if the uniting of the two portfolios leads to any reduction in the planning delays which house builders regard as the biggest obstacle to increasing the volume of new homes constructed.
Lewis only became an MP in 2010 but is a long-time political ally of Communities Secretary Eric Pickles, whose position remains unchanged in the reshuffle despite speculation that he may be sacked to make way for a younger - and more photogenic - successor.
In 2012 Lewis - a qualified barrister - was promoted to under-secretary of state with the DCLG, with responsibility for a range of issues including local government, fire services, high streets and pubs.
- Kris Hopkins
- Eric Pickles
- Nick Boles
Agents have reacted cautiously to the latest Office of National Statistics figures showing that house prices increased by 10.5 per cent in the year to May 2014, up slightly from the 9.9 per cent figure recorded in April.
Industry figures say that these figures are based on completions so reflect sale prices of up to nine weeks ago - before the current slowdown set in.
“A balanced view has to be taken as some regions of the country have seen very little house price growth. Places like Lancashire and York are still experiencing annual growth below one per cent. In London prices have begun to fall at the upper end of the market” says David Newnes of LSL Property Services.
“These figures predate last month’s action by the Financial Policy Committee on future mortgage lending but they will undoubtedly heighten pressure for follow-up measures later in the year unless property inflation tails off” warns Peter Williams, executive director of the Intermediary Mortgage Lenders Association.
The ONS data shows that house price annual inflation was 11.0 per cent in England, 6.5 per cent in Wales, 3.6 per cent in Scotland and -0.7 per cent in Northern Ireland.
Annual house price increases in England were driven by a record annual increase in London of 20.1 per cent and to a lesser extent increases in the south east (9.6 per cent) and the east of England (8.6 per cent).
In May 2014, prices paid by first-time buyers were 11.3 per cent higher on average than in May 2013. For existing owners who were moving house, prices increased by 10.1 per cent over the same period.
- housing market
Get ready to use a defibrillator on David Cameron - just as he reshuffles the cabinet to become more media-savvy and in touch with the community, so it has been revealed that over 15 per cent of young adults believe Help To Buy is a personal shopping service.
Despite the publicity machine surrounding its introduction and apparent success, the government’s flagship housing measure is virtually unknown amongst many young adults.
When asked ‘What is the Help to Buy scheme?’ the 1,000 respondents to a survey were given a list of five options.
Over 15 per cent of 18-24 year olds thought it was a recently launched face-to-face personal shopping service by the major supermarkets for the over 60s. Some 10 per cent of 25-34 year olds thought the same.
Another 11 per cent of 18-24 year olds thought Help to Buy was a new web service to help online traders - and 10 per cent of 25-34 year olds thought the same.
It was only those aged 45 and older who, by a significant majority, understood what the scheme was. Some 85 per cent of those aged 45-54 and 94 per cent aged over 55 knew exactly what it was.
The survey was carried out by removals company Bishop’s Move.
- help to buy
- Bishop's Move
- housing market