High court pulls the plug on a housing benefit cash scheme

A High Court judge has ruled in favour of Middlesborough Council in a landmark case that has saved taxpayers millions of pounds in housing benefit.

Heard in London, the case focused on claims made on behalf of vulnerable adults by My Space Housing Solutions, a charity founded in 2012 that provides supported accommodation for individuals in need. 

The not-for-profit had applied for exempt housing benefit for residents in supported housing schemes, a classification that allows landlords to charge higher rents. 

However, the court found the arrangements had been set up in a way that sought to take advantage of the system.

In a judgement published on 20th April 2026, Judge Edward Jacobs dismissed an appeal by the charity, concluding there had been no error of law in earlier decisions. 

The ruling supported the position of Middlesborough Council and Sunderland City Council, which had both rejected benefit claims linked to the schemes. 

Councils argued the housing arrangements did not provide adequate support and had been established primarily to benefit from the housing benefit system. 

Developed in North Ormesby in 2017, the schemes were previously offered to Middlesborough Council but deemed unsuitable for vulnerable and disabled residents. 

Despite that, the charity went ahead with the developments. 

Inspections later found a single staff member was responsible for supporting 38 tenants across the properties. 

An initial challenge at Teesside Magistrates’ Court in 2024 was unsuccessful, before the case was taken to the Upper Tribunal. 

Cllr Nicky Walker, executive member for finance, said: ‘This has been a long-running legal process, but we’re again pleased our position has been backed in court. 

‘It’s vitally important that the benefits system is used properly rather than abused.’

‘Vulnerable people shouldn’t find themselves at the centre of cases like this,’ she continued. ‘They just deserve the proper support by companies acting in their best interests.

‘By refusing these claims and defending the position robustly in the courts the two councils have done right by the taxpayer and saved the public purse huge sums of money.’

My Space Housing Solutions previously featured in a 2022 investigation by BBC Panorama, which linked the organisation to property sales worth more than £120m.

Image: Julian Tong/UnSplash 

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