Landmark High Court ruling finds non-compliant exempt provider ‘taking advantage’ of benefit system for profit

They were offered to the councils as specialist housing provision, but rejected as being unsuitable for all client groups, including vulnerable and disabled residents. Despite this, the charity pushed ahead with its plan.

My Space subsequently appealed the decisions initially to Teesside Magistrates’ Court in 2024 and then again to an upper tribunal at the High Court in October 2025.

In a judgement published on 20 April 2026, Judge Edward Jacobs dismissed the appeal and found there had been no error of law during the earlier hearing.

In the tribunal document the judge explained: “These liabilities were created to take advantage of the housing benefit scheme. 

“For the reasons we set out below, care was not provided at any reasonable level in the Middlesbrough appeals and we think this was probably because importance was not placed upon the provision of care so as to channel resources to cover the costs associated with paying the head landlords and ensuring housing management standards were maintained.

“These payments were, in our view, necessary to bring the accommodation within the scope of ‘exempt accommodation’ and in [the judges’] view amount to an abuse of the scheme.

“The fact that setting up My Space and being involved in its operations in the ensuing years appears prima facie to have enabled [the owner] and the companies he operates to make significant profits ostensibly at public expense.”

The judge explained that the evidence presented to the court “appears to us that significant profits were achieved on the back of the operating model”.

The Regulator of Social Housing (RSH) warned in 2025 that specialised supported housing is not being delivered by lease-based providers in a way that consistently meets its standards.

The judge also referenced previous reporting by Inside Housing on My Space as he described the organisation as one “without any apparent understanding of how it should operate within the confines of charity law and the rules associated with being a registered social landlord”.

Nicky Walker, Middlesbrough Council’s executive member for finance, said the authority had acted at all times to protect the integrity of the benefits system.

“This has been a long-running legal process, but we’re again pleased our position has been backed in court,” she said.

“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. 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.”

In February 2025, My Space entered a company voluntary arrangement (CVA) with its creditors, saving it from liquidation.

The CVA came two years after the RSH issued an enforcement notice to My Space Housing Solutions, saying it needed to commission insolvency advice.

In October 2022, the Charity Commission opened a statutory inquiry into the provider after it found that payments of more than £1m were made to nine of its own trustees over a period of seven years.

In December the same year, the English regulator downgraded My Space to the lowest possible governance and financial viability grades after its failure to provide evidence was branded “unacceptable”.