Just a quick question:

Is there any provision that allows money to be disregarded if it has been borrowed with the express purpose of purchasing a property?

I know there are Regs covering borrowing money for improvements or money from the sale of a property if this is to be used to buy another property, but I can't see anything on this specific point...

My client's been overpaid because he held money for this purpose for a few months

You might have a look at the Quistclose type of resulting trust (generally the only sort of resulting trust that the DWP seems capable of recognising, or perhaps only quoting in submissions - I don't think they've the foggiest what it is about).

Quistclose could apply if the loan was made on terms that unless it was used to buy a property within a certain period it had to be repaid intact and possibly even with interest. If the loan, under its terms, could ONLY be used for this one purpose, then it would not be treated as the client's capital as it was not available to the client to use for any other purpose. This is not the same thing as a disregard - it is about whether it is capital at all.

I would guess that this was a private loan, probably from a family member, rather than an unsecured personal loan from a financial institution?

My original inclination was a trust argument, but I was just wondering whether there was an available disregard first as this would be more certain than arguing in trust.

Unfortunately this was a personal loan from a highstreet bank and there were no conditions attached as to use so I doubt there's a trust argument anyway...