Pension Credit ‘right to buy’ council property & discount treated as capital for PC purposes

Client is in receipt of pension credit (GC) applied to buy her council home under the right to buy scheme, £23,400 discount offered so client went a head and bought her home. 

Client received a letter from Pension Service - £23,400 discount minus a percentage of the discount over 5 years will be treated as actual capital.

6/8/13 capital = £4,680
6/8/14 capital = £9,360
6/8/15 capital = £14,040
6/8/16 capital = £18,720
6/8/17 capital = £23,400

I’m looking through Sweet & Maxwell for capital regs, any thoughts?

Thanks Tony, I have entered an appeal & requested a written explanation plus copy of the decision. Will update this post if this matter comes to anything.

To say the standards of decision making are falling is an understatement

If she now has a mortgage tell her to put in a MI12 for interest help?

The right to buy discount gives the tenant an equitable interest in the property to the value of the discount (see Springette v Defoe (1992) CA).  The discount had no value to anyone but the tenant as it is based on her occupation so it had no saleable value even if the rules allowed such a thing.  The equitable interest would, in my view, have only crystallized at the point of purchase, so, as Tony says, the equitable interest is in the dwelling usually occupied as the home and is, therefore, disregarded anyway.  Even, if I am wrong on the moment of crystallization, the interest would have at all times, both before and after the purchase, been in the dwelling usually occupied as the home.  A very strange state of affairs indeed.