"Regardless of the rules, the question still applies - what is the justification in making any distinction between paying rent to a stranger and paying rent to a friend?"

Presumably the only reason one should obtain expenses is if there is an actual expense occurred. The reason that you are not allowed to claim if living with a partner is because there is no expense occurred as you'd be living there anyway. In other words the claimant is making the claim for his, or his partner's, personal gain rather than costs incurred. Laws seems to be admitting this but with the excuse that he didn't claim because he didn't want to bring his sexuality and his relationship into the open. He isn't claiming this man isn't his partner! Rules are rules and this seems to be a pretty reasonable one.