i have a client who is currently a council tenant, getting IS + HB. He is severely long term disabled, getting DLA middle care and SDP. His parents are thinking of buying the council flat for him under the right to buy, they will buy it outright, no mortgage or anything.
this will mean he will become liable for service charges, which will be high because the block he lives in has a lift, laundry facilities etc. There is also improvements planned to the block very soon, double glazing, repairs to roof, which will be charged as one big charge.
the question is will these new housing costs be paid by IS?
I am quite confused, having looked in CPAG
Will there be a waiting period? will IS be limited to the amount of housing benefit he was getting?
how will the large single charge be assessed for IS?
thank you

Hi
Yes he will be entitled to housing costs as part of his IS, but the total he receives will be restricted 'initially' to the amount of his HB eligible rent. There will be no waiting time -- he will be able to claim housing costs straight away.

So, assuming the mortgage is fully paid off the only housing costs he'll be liable to pay will be service charges ('other housing costs') -- presumably in the form of an annual bill from the council divided by 52 (watch out that some items may be excluded as ineligible -- look at IS Schedule 3, para 17). As long as this does not exceed his current eligible rent there'll be no problem now.

One common problem for leaseholders in council blocks is the fact that the annual service charge can vary horrendously from year to year - less than £2000 one year, over £14000 the next if major works are done.

He should be OK with this because Schedule 3, para 4 (8) allows that the restricted amount can be increased
"to take account of any increase, arising after the date of the acquisition, .... in any housing costs which qualify under paragraph 17 (other housing costs)"
-- ie if his service charge increases and subsequently exceeds the restricted amount it can still be paid in full.

The other possible pitfall may be when the major works are done. The DM may try to say that the LA bill is no longer a service charge but falls into the category of "repairs & improvements" under sched 3, para 16. Then the DM will say the client could get a loan and IS will cover the interest (not a good option usually). If you read paras 16 and 17 together it's very unclear where service charges (including basic maintenance of a building) end and "repairs & improvements" begin.

An old colleague of mine from Redbridge has a very useful CD for a case like this -- CIS/2865/2003 -- repairs & improvements must relate to "maintaining the fitness of the dwelling for human habitation", which in my reading implies that if the work were not done the dwelling would become unfit, so it's quite a strict test.

I couldn't find the decision on the Commissioners' website, so if you want a copy email me.

alban