[2025] UKUT 264 (LC)

The Tribunal erred in that it wrongly interpreted or wrongly applied section 263(3)(b) of the Housing Act 2004.

Section 263(3)(b) provides that the rent or other payments are made by virtue of an “arrangement”. The tribunal equates or conflates the statutory term “an arrangement” with “the agreement” – in this case a formal, written licence agreement. The tribunal’s conclusion that the “the agreement itself must provide for GGM to receive rental payments” goes beyond the statutory language. An ‘arrangement’ may be more than just a single contract. It may be constituted by a number of written or unwritten terms, agreements, practices or understandings.

In this particular case, the licence was just a part of the arrangement. As the Tribunal found the very purpose of the was to allow paying guardians to occupy the property for security. The ‘arrangement’ therefore must include all of the agreements, understandings and practices that made that possible, including that GGM would receive rent or other payments from the guardians via the Respondent.

Whereas it may not have been explicit or implicit in the written agreement between LBH and GGM that GGM would receive payments, it was explicit or implicit in the arrangement as a whole that it would.

Insofar as s263(3) is an anti-avoidance provision (Cabo v Dezotti [2022] UKUT 240 (LC)), the Tribunal’s narrow interpretation of what constituted the arrangement would render the provisions easy to evade.