Hi,

My client has been living with his ex wife for fifteen years in a house they jointly own (not living together as partners in this period). There is a mortgage but also around £100,000.00 of equity in the property. The client is 56 and on Incapacity Benefit and Incomes Support.

If he moves out and starts renting another property, will the value of the home count as capital for Housing Benefit purposes?

Thanks

He has a beneficial interest of about £50K in the property - if he moved out, for Housing benefit/CTB and Income Support purposes he would need to be able to show legal reasons as to why that interest was unrealisable.

If he did move out he would be expected to take all possible steps to realise this asset - including if necessary going to Court to obtain an order forcing a sale.

If the property were placed on the market then his interest in it would be ignored for up to six months, and possibly longer depending on circumstances prevailing at the time ......

I would take a slightly differing approach (assuming that the partner left in the home is not a lone-parent, in which case it would be disregarded).

The value to be taken into account is not the property valuation nor the equity in the property. It is the 'market value' (reg 47 HBR), which is the price commanded between a willing buyer and a willing seller (R(SB)6/84).

In a sale, the client will be selling his 50% share of the property. If the wife is unwilling to sell then a half share in a house with a sitting occupant who doesn't want to sell is likely to be very low indeed - would you buy it?

Other factors such as the state of the housing market will also affect the market value. When the 'market value' is determined, then reduce for incumbrances and costs of sale, etc.

The annotation to IS reg 49 has more caselaw references (page 415, vol 22 Soc.Sec Leg (Bonner)).

Tony is quite right about the more technical bits, including market value and the other factors that he mentioned - mine was only meant to be a brief explanation of the vagaries of being a property owner...

50% beneficial interest cannot be assumed. The intentions and conduct of the parties at the time of the conveyance regarding taking the equitable interest as joint tenants or tenants in common need to be determined. Courts are more likely to make certain assumptions that favour a finding of equitable joint tenancy regarding married couples than they are for other joint purchasers.

If they are equitable tenants in common (they cannot be equitable tenants in law) then each has a beneficial interest in proportion to each person’s contribution to the purchase price and subsequent mortgage payments, and, on rare occasions, the cost of certain (substantial) improvements which would increase the value of the sale price.

Looking at the actual equitable interests in the property, whether express or for example resulting from one party having put a lot more into the property than the other, will really only help you divvy up the proceeds of a sale between voluntary sellers, or in preventing someone who is not registered as a legal owner to establish a beneficial interest.

As has been already said, the practical problem is establishing the market value of the client's interest in the property if it were to be sold against the wishes of a person who remains in occupation and has no interest in selling. That is not soemthing for which there is likely to be a ready market.

Though people may buy property as joint tenants (they both own the whole property, and there is no interest to be left by will so it passes by survisorship) or as tenants in common, in any proportions they delcare or seems right in the circumstances, and attempt by one joint tenant to deal with his share alone will in law sever the joint tenancy into tenants in common in equal shares.

Sorry, the law lecturer in me got a bit carried away.

I’m afraid there is probably no escaping from this. What a DM will probably do (and this is done routinely) is to apply regulation 51 of the HB Regulations. There is an identical provision for IS/JSA/PC/CTB. If regulation 51 is applied then it will have to be tackled.

Capital jointly held
51. “Except where a claimant possesses capital which is disregarded under regulation 49(5) (notional capital) where a claimant and one or more persons are beneficially entitled in possession to any capital asset they shall be treated as if each of them were entitled in possession to the whole beneficial interest therein in an equal share and the foregoing provisions of this Section shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess”.

This only applies to equitable joint tenants and not to equitable tenants in common as equitable tenants in common have undivided shares in the asset and, therefore, do not hold capital jointly. Thus regulation 51 does not apply to them (see Hourigan v Secretary of state for Work and Pensions (2002) CA). Therefore the claimant’s actual interest (if he is a tenant in common) must be calculated and there is no power to automatically deem him as possessing an equal share with the other parties.

See the commentary to regulation 52 of the IS Regulations for a good discussion of the issues.