Shared ownership and HB for service charges with no rent to pay

Hi all,

Recent claimant of ESA (no other income) who has a 75% shared ownership property. No mortgage on the 75% and no rent to pay on the remaining 25% as it is a special scheme for over 55s. The tenant is still liable for the service charges.

She has made an application for housing benefit but the LA seem to be hesitant to make a decision. She says they have asked her to write to them stating that she is not eligible for HB as she does not have to pay rent.

Is she? I’ve looked at both HB and SMI and cannot rule either out. In the normal circumstances (paying rent) she would be eligible to claim for the charges. She doesn’t have a mortgage or any rent to pay as such but is still left with the service charges and is struggling to pay them on her assessment rate ESA.

I am waiting on a copy of the lease in the hopes that this might point me in the right direction.

Any help would be greatly appreciated!

As long as paying the service charges is a condition of tenancy (i.e. if you don’t pay you could in theory end up evicted) they are eligible for HB.

Starting point is Reg 12(1), which lists the payments in respect of a dwelling for which HB is payable.  Among these eligible payments are service charges payable as a condition of tenancy.  But Reg 12(2) then excludes some of these payments. Under Reg 12(2)(a) payments under a long tenancy are excluded, except payments under a shared ownership tenancy.  With nothing in Reg 12(2) to exclude shared ownership service charges, it follows they are eligible in accordance with Reg 12(1).

Not that it matters, but is there really no rent at all?  Not even a peppercorn ground rent?  If there is, that’s eligible for HB as well.  I know that shared ownership leases defy the normal laws of physics sometimes, but I would have thought that in all cases at least some rent is payable if you have a tenancy: whether it’s £200 a week under an assured shorthold, or £1 a year under a 999-year lease, but there is always rent.  Maybe I’m wrong.

If she’s an owner does she not claim these housing costs via income related ESA? She would if an outright owner but not absolutely sure as she is only 75% buyer.

Is this shared ownership or shared equity?

I have just received a copy of the lease. The tenant has the maximum 75% share of the property and pays zero rent on the remainder. Sorry I can’t see the phrase “shared equity” or “share ownership” anywhere on the document.

She is still liable for the service charges which appear to be listed under the rental area and named as “service charge specified proportion of service provision”. Only in this case the rent is marked as zero in accordance to this particular scheme. It then goes on to say that the service charge is payable in accordance with the rent (which just so happens to be nothing). I see no reason why this cannot be paid by HB…

Hi all raising this again for clarification

I have a client who is of Pension Age, receives SRP and PC - she is thinking of moving into a shared equity property and would own 75% outright- again no rent to pay at all

HB Anorak advised that likely that, even if no rent due, HB could be claimed for eligible service charges but then Gareth’s later post was asking for clarification on “shared equity or shared ownership”  status (not sure if this makes a difference about HB covering charges or not)

Presumably PC can include eligible service charges in their award if HB cannot? 

Many thanks

Shared equity is very different from shared ownership. A shared equity owner is essentially a trustee for the benefit of themselves and A mortgage lender. Their housing costs are eligible for DWP benefits under normal owner occupier rules. If the property is leasehold there could be service charges which are eligible for SPC.

HB covers shared ownership, which is where you have a lease under which the ground rent is inversely proportional to the purchase price paid to the freeholder.