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Sheffield council houses - what happens after death?


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Yes. However, an attempt to vest a legal estate in a minor produces what's called a Resulting/Constructive Trust. This is automatic and needs no express wording to create it. H&F themselves became the trustees, holding on trust for the minor (albeit inadvertently). Their fiduciary duty to her as trustees barred them from exercising landlord powers.

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Who could then apply then apply to county court to absolve themselves of the responsibility and have a new trustee appointed could they not?

No- because a Local Housing Authority are obliged to house people, rather than putting their LHA ownership into trust.

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Well, an attempted letting to an adult and a minor (jointly) would avoid the problems.

The letting would be valid as a letting to the adult alone; so no 'trust' problems arise for L.

 

But the mere fact that an adult co-occupies with the minor won't assist if L attempted to let to the minor alone.

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