Hello,

I hope someone can help me with this one my head is scrambled.

I have a 71 year old client who has no State Pension receives GPC and was renting a property claiming full Council Tax and Housing Benefit of £60 per week.

In 2005 my client decided to but a property (£73,000.00). The Pension Service has restricted his Housing Costs to £60.00 per week (as his rent would have been). The client has seen no change in this payment in almost 2 years.

If he was to receive the full amount he would be entitled to £93 per week housing costs. The client is having difficulty meeting the difference and may have to sell and move.

Obviously the rule is if you take out a new or increased loan during a relevant period (a time on PC, IS etc) the cost may be restricted.

Page 811 CPAG states it will be restricted if

- “you were in rented accommodation and getting Housing Benefit, to begin with you only get the amount of Housing Benefit you were entitled to plus any other housing costs ”

AdviserNet –

- “The interest on the loan which can be considered for pension credit purposes is initially restricted to the amount of housing benefit s/he was receiving plus any housing costs being met at the same time by pension credit.”

I would like to know what timescale is meant by “to begin with“ in CPAG and “initially” on AdvisorNet as to how long the restriction would be made.

I understand that a client is eligible to receive subsequent increases in the standard rate of interest.

However another issue is how does the Pension Service work out a subsequent increase in the rate of interest on a reduced Housing Cost payment? They are not looking at the loan amount.

Any help please???????

This is paragraphs 8 and 9 of Sched II of the Pension Credit Regs and the words it uses are "shall initially not exceed the aggregate of any housing benefit payable in ... and shall be increased subsequently only to the extent that it is necessary to take account of any increase, after the date of acquisition, in the standard rate or in any housing costs which qualify "

How they work it out I assume is they take the amount of HB, work out how much capital that would be interest on at the date of acquisition at the standard rate then applicable, and then use that imaginary capital figure to decide the amount of interest payable when the rate changes.

Not very hopeful I'm afraid.

The DMG example, lifted from our CD-Rom, says:

"Agnes is in receipt of SPC. She lives in a council house and £47 a week HB is paid towards her rent. Agnes buys a nearby property using a mortgage. The interest payable on the mortgage using the standard interest rate is £55 a week. Agnes’ housing costs are restricted to £47 a week .
After the date of the purchase there is an increase in the standard interest rate which means a £3 increase in her housing costs to £58. The additional amount allowed for housing costs is increased by £3 to £50.
The standard interest rate then decreases and Agnes’ housing costs assessed using that rate fall from £58 to £54. The additional amount for housing costs remains in payment at £50.
The standard interest rate decreases further and Agnes’ housing costs fall to £49. The additional amount allowed for housing costs is reduced to £49 a week.
The actual housing costs are now less than the restricted amount, so the restriction ends. Any later increases or decreases in the amount of housing costs payable on Agnes’ mortgage are assessed in the normal way."

Thanks,

Think that sorts it.

If he bought a property other than the one he was renting, and if he can argue that the new property was more suited to the "special needs of a disabled person" occupying it, the HB restriction should not apply