West Law Report

Rent counts towards purchase

Posted in Times Law Report by mrkooenglish on June 26, 2008

From The TimesJune 24, 2008

Rent counts towards purchase
Hanoman v Southwark London Borough Council (No 2) in the Court of Appeal
Court of Appeal

Published June 24, 2008

Hanoman v Southwark London Borough Council (No 2)

Before Sir Anthony Clarke, Master of the Rolls, Lady Justice Arden and Lord Justice Jacob

Judgment June 12, 2008

Once a council tenant had served upon a council an operative notice of delay under the statutory right-to-buy scheme, rent paid by way of housing benefit counted towards the purchase price payable by the tenant for the council property.

The Court of Appeal so held in a reserved judgment, allowing an appeal by Colin Hanoman, from the dismissal by Judge Simpson in the Mayor’s and City of London County Court on February 27, 2007, of his claim for damages against Southwark London Borough Council relating to his purchase of a lease of his council flat.

The tenant, who was in receipt of housing benefit, sought to exercise his right to buy from the defendant council a long lease of his council flat. He served operative notices of delay on the council under the Housing Act 1985, and claimed that rent paid during the period of their delay reduced the already discounted purchase price of £17,000 to nil in accordance with sections 153A(5) and 153B of the 1985 Act, as inserted by section 124 of the Housing Act 1988.

The council disputed the tenant’s entitlement to any further reduction in the purchase price, but he agreed to complete at the price of £17,000 while purportedly reserving the right to raise the issue of the further discount in the county court.

In dismissing the tenant’s claim, the judge had, inter alia, accepted the council’s submissions that housing benefit was not rent attributable to the purchase price under sections 153A(5) and 153B.

Mr Dominic Preston for the tenant; Mr Christopher Heather for the council.

LADY JUSTICE ARDEN said that section 153A(5) did not exclude the payment of rent by third parties on behalf of the tenant. There was no material difference in legal terms between the payment of rent by a third party and the credit by the housing authority of rent from its housing benefit account to the tenant’s rent account. The effect so far as the tenant was concerned was the same.

The natural meaning of sections 153A and 153B was that rent paid encompassed all rent duly paid, whatever the source of payment.

There was in fact and in law a collateral contract that the claimant would proceed to completion on the basis that he would be able to enforce any of his rights in the county court after completion.

As long as rectification was not sought, the collateral contract was not rendered unenforceable by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

The Master of the Rolls and Lord Justice Jacob agreed.

Solicitors: Glazer Delmar; Mr Graham Southwark.


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