Effect of Right to Buy on IR-ESA

I have a client who is looking into exercising his right to buy his council flat.

He is in receipt of DLA, IR-ESA and HB. He wanted to know how exercising his right to buy would affect his benefits.

He states that a family friend is buying the property for him and the property is going to be bought outright so he is not going to be paying any mortgage in the future.

The property is a flat in London but the council has not informed him the price of the property yet. He spoke with an agent who told him that it would be around £400k and he thinks he will be entitled to a discount of around £100k.

I know that his DLA will not be affected in any way.

I know that this will affect his housing benefit, but the property is going to be bought outright with full payment, therefore no mortgage hence no need for him to claim support for mortgage interest.

He will be living in the property, so I know that any house the claimant normally lives in normally is not counted as capital for IR-ESA, although any house that is not his primary residence normally will count towards his capital limit.  He does not have any capital or savings over £16k.

Does the fact that somebody else is putting up the capital to purchase the property have any effect on his entitlement to ESA?

He states that whatever the capital is will be paid directly to the local authority, does this matter at all.

He also said that the property will be in his name.

Have I missed anything out or is this all I need to tell the client?  I will be grateful for any input.

Thanks everyone.

I can’t think why this would be a problem - as you say, value of dwelling a claimant lives in is disregarded and it will decrease the amount of benefit he is receiving overall (ie no housing benefit).

Can anyone else think of a potential issue?

ESA will pay ground rent and service charges too

Thanks Ros and HB Anorak for your input. I really appreciate it. I will advise my client accordingly.