Any advice would be welcome :

Tenant is 80yrs old and has moved into sheltered accommodation in March 08 , before his move he lived in his ex council house which his son ( who shares the same name ) bought for him in 2003 , as part of the right to buy scheme.
Tenants son now occupies the home he bought , but his father lived in until March 08.
The tenant applied for HB / CTB for his new home and LA say he has no entitlement as he has deprived himself of capital ( the value of his old home ) My intention is clearly to appeal , but has anyone had any similar scenario's ? Tenant has no capital and relies on his pension entitlement only.

When you say bought for him, do you mean that the son paid the entire purchase price or just took out the mortgage in his name with his father making the mortgage payments?

the son took out a mortgage himself for the home his father had lived for around 20 years , my understanding is the LA have suggested something like " abusing the right to buy scheme " and refused the fathers application for HB / CTB in his new sheltered housing accommodation.

however as the son appears to be the legal owner , i cant see an argument for deprivation of capital , if the the father doesn't own the property ???.

Its not necessarily about the legal owner. The key question is who benefits from the proceeds of sale (if sold). In other words who pays the mortgage. Where there is only one legal owner then that is the proper staring point, subject to any declaration on the land register.

The right to buy discount can create a beneficial interest (I'll dig the reference out later).

"The right to buy discount can create a beneficial interest (I'll dig the reference out later)".

Case is Springette v Defoe (CA) 1992.

Let us assume for the sake of argument that the son paid the entire purchase price. The father would still have a beneficial interest in the property for the amount of the right to buy discount as a percentage proportion of the proceeds of sale after any encumbrances on it.

Because he has a beneficial interest then he has actual capital and he has not deprived himself of anything, merely because the son has taken the legal title from the local authority and paid the purchase price. The father has not deprived himself of anything. He still has a beneficial interest in it, and, did not have any legal interest in the property in the first place.

The proper questions are then can he realize his share in the property and if so what is the actual valuation on the open market given a willing buyer and a willing seller. This will depend on a number of factors; one will be the existence of any existing tenants who have some form of statutory protection. For the proper approach to valuation see R(JSA) 1/2.

If he deprives himself of his beneficial interest (by assigning it away for example) then it has to be determined whether there was a significant operative purpose (and not the only operative purpose) behind the deprivation to gain access to or increase entitlement to HB/CTB. That requires a separate (even though linked) enquiry.

and if he does have a beneficial interests - as to which, a trust lawyer will need to advise - the next question is whether he can forece the legal owner to pay out any beneficial interest he might have - which I doubt.

also, of course, the purchase of the house in 2003 can't, one would have thought, be linked to his going into shelered accommodation in 2008, 5 years later. the LA can't say that he knew in 2003 he would need sheltred acoommodation in 2008 (unless, perhaps, it's obvious from the medical history). even then there's the significant operative purpose point, as discussed

does your client receive guarantee credit? if so, the LA is legally bound to accept the SoS's assessment of capital for pension credit purposes.

if not, it is, as paul says, a question of the valuation of his interest in the capital. it is very doubtful that any question of abuse of the right to buy scheme enters into it - most of the abuse of the scheme has been by property speculators not tenants and their families, and it's a pity that abuse of some sort is the first thing that occurs to housing benefifit officers, when the change in circumstances is most probably attributable to erm... life.

if by any chance, his nasty son has kicked him out and robbed him of his home, i'd love to know how they equate this to the old gent depriving himself of capital for the purpose of obtaining housing benefit. what is more likely, is that with age and infirmity, his old home is no longer suitable.

interestingly enough, the old office of the deputy prime minister publication about right to buy made it clear that the scheme was intended to benefit tenants, and their families. the wording has changed in the current publications, as have the rules, largely in response to abuse by property speculators, but the policy intention as far as i'm aware, remains intact. the right to buy scheme gives a perfectly legal advantage to the former, and one would hope that LA's would take care that they can substantiate their allegations if they are going to throw phrases like abuse of right to buy around.

in most of the rtb cases i've seen, the mortgage is in joint names, even if the son or daughter of the tenant is the person taking responsibility for the whole of the mortgage payments, which is quite common in the case of pensioners. you will need to check the facts.

a case that i had, the parent was the tenant and was on IS. one of his daughters made all the payments on a mortgage in their joint names, and when she and her sister, also living with him later married, and the house became overcrowded, leading to tensions and family squabbles, it was clear that somebody had to move out, and since the father couldn't afford the mortgage, and buy out his daughters, he moved. they tried deprivation of capital, but revised the decision without having to go to tribunal.

in your case, 5 years into a mortgage, the son will have a legal and beneficial interest in the equity, and your client will have a beneficial interest in a proportion of it, derived from the discount. para 84258 of the DMG deals with how beneficial interest may reduce or increase when joint owners make unequal payments. i'm not entirely sure how his interest derived from the rtb discount should be calculated. it might not be so simple as referring to the amount of the original discount or its percentage of the overall property valuation, because it could may not come to fruition until the mortgage is paid off - it would be unfair to the son who has made all the payments if his interest would be wiped out in favour of his father's - perhaps assuming a 25 year mortgage, it would be a fifth of the discount value? in any event, it should be possible to express it as a share of the property, and then the next step, is the value such a share would fetch on the open market. it would be a small share, and its value may be very little.

This *may* also be of interest (not checked for direct relevance):

R v Caerphilly County BC HBRB ex p JONES (1999) EWHC Admin 83 32 HLR 82 QBD

In my experience the scenario of a child of the original tenant taking full responsibility for the mortgage in an RTB case is not at all unusual - you often see that the property is transferred to the child after this subject to a declaration of trust in favour of the parent for theri lifetime..

Was there ever a declaration of trust in documentary form? It isn't needed for a resulting trust, which is what the right to buy discount creates in these cases, but it would be good practice from any solicitor acting for the parties. It doesn't half reduce arguments afterwards.

It would, for example, be perfectly in order for such a document to say that the father, in exchange for transferring the legal title to his son, was given a right to live rent-free in the property for the rest of his life or until such time as he needed to go into residential or supported accommodation. At that point then his beneficial interest would be extinguished, and provided that he had received proper independent advice about what he was doing there could be no question of either actual or notional capital. After all, before the transfer he was liable for the rent and all the maintenance costs: thus any transfer had a real practical value to him and I would not care to defend the argument that it must ahve been at an undervalue.

However, if there was no commutation of the beneficial interests by an express declaration of trust into a life interest in the whole to the father and an interst in remainder only for the son, then I agree in toto with Nevip's analysis.