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This is an appeal brought against a decision of the Court of Appeal which upheld the first instance decision in the Administrative Court.  By that decision, the Deputy Judge declared that the policy adopted by the London Borough of Newham pursuant to s.167 of the Housing Act 1996 for determining priorities in allocating their social housing accommodation was unlawful.

Newham’s current allocation scheme (“the Scheme”) involves two different methods of offering properties – choice based letting arrangement (“CBL”) and direct offer arrangement (“Direct Offers”).  Applicants subject to Direct Offers take priority over those subject to CBL.

Applicants admitted to the CBL are placed in one of three categories – (1) “Priority Homeseekers”, being those whose households contain at least one person who satisfies one or more of the criteria in s.167(2); (2) “Tenants Seeking a Transfer” being those who are already Newham tenants, and are applying for a transfer, but do not fall within category (1); and (3) “Homeseekers”, being those who do not fall within category (1) or (2).

Once a property is available to be let on the CBL, it is offered to those registered on that part of the Scheme, and they are free to bid. The CBL provides that no more than 5% of lettings can be to Tenants seeking a Transfer.  Around 95% of the CBL properties are allocated to applicants who are Priority Homeseekers. When more than one applicant in the Priority Homeseekers group bids for a property, the property is awarded to the applicant who has been a Priority Homeseeker for the longest.

Direct Offers include a number of categories of applicant – “Additional Preference”, “Multiple Needs”, “Under Occupation Transfers”, “Decants” and “Special Schemes”. The first two categories are intended to include applicants who would be Priority Homeseekers under the CBL, but who have especially pressing needs for rehousing. The Additional Preference group consist of those who are judged by Newham’s housing officers to represent particularly acute cases under some of the paragraphs of s.67(2). Its criteria are very stringent. The Multiple Needs group includes those who can attain a specified score, by reference to the number of people in the applicant’s household requiring to move on the ground of statutory overcrowding, or Environmental Health abatement action or medical grounds.  The criteria for qualifying for Multiple Needs are also very tight.  

There were two reasons why the courts below considered that the Scheme was unlawful. The first, and principal, reason was that the CBL “places all those who qualify for reasonable preference under s.167(2) in a single group, that of Priority Homeseeker, and … their relative priority in bidding for available accommodation is determined not by relative need, but by the length of time they have been registered on the housing list”. It was “plainly an insufficient mechanism for identifying those in greatest need and giving them priority”. The Court of Appeal rejected the argument that the existence of the Additional Preference and Multiple Needs groups within the Direct Offers “ma[d]e good the deficiency of the [CBL]”, because of the “highly restrictive” criteria which have to be satisfied in order to qualify for those groups.

The second reason why the Scheme was held to be unlawful was due to the fact that the CBL involved allocating a significant (if small) proportion of housing to a class of applicants who did not satisfy any of the requirements in paras (a) to (e) of s.167(2), namely the Tenants Seeking a Transfer.

The House of Lords unanimously allowed Newham’s appeal and dismissed the claim for judicial review insofar as it challenged the legality of Newham’s housing allocation scheme.  Particularly in light of the discretion accorded to housing authorities under s.159(7) of the 1996 Act, it was impossible to argue that an authority’s allocation scheme was unlawful unless the basis on which it accorded priority as between those applicants who satisfied one or more of paras (a) to (e) of s.167(2) was irrational. Given the factors in this case, it was very difficult to accept that the Scheme could be characterised as irrational – the Scheme plainly satisfied, and in some instances exceeded, the express statutory requirements.