Loans for Mortgage Payments

I have a client who has been claiming UC since November 2021. He received £17,750 settlement from an Industrial Tribunal and used all of it except £5000 to clear his mortgage arrears.  (As far as I can see this did not interrupt his entitlement to UC, possibly because it was used so quickly, or it covered a debt?)  However, he was also paid £200 outstanding holiday pay.  He has now applied and been refused loans for mortgage payments on this basis:

“Mortgage payment not applicable as claimant has had earnings from an employer in a previous A.P.  To be eligible claimant needs to have 9 APs without earnings. This will be reviewed in March 2023 to see if there have been 9APs without earnings.”

I have looked at the Loans for Mortgage Interest Regulations, Reg 2 and they define “qualifying period” as 9 consecutive periods in which claimant has been entitled to Universal Credit. I can’t find anything about remunerative work disqualifying them.

Am I missing anything?  Any information would be very useful.

Thanks a lot. 

Ruth

Hi Ruth - earnings rule is in reg 3(4) - https://www.legislation.gov.uk/uksi/2017/725/regulation/3 - but it just says you can’t get help with LMI in any AP when have earnings - it doesn’t say that APs with earnings can’t count towards the qualifying period.

Tho it looks like DWP might not be clear on it - see CPAG pg 844 - 2nd bullet of 2nd lot of bullets

So looks like worth challenging

In Italy, so no regs.  There is a reg. which says that during the waiting period the claimant must otherwise qualify for a loan; so any earnings would disqualify.

Thanks to both of you.  I will challenge it - it seems wrong that a very small payment - less than £200 after tax - should leave him with the possibility of repossession, or at least put him in arrears of around £5000.

This is an issue which has been discussed before. See https://www.rightsnet.org.uk/forums/viewthread/13393 and https://www.rightsnet.org.uk/forums/viewthread/13495

For the purposes of owner-occupier housing costs which are met as UC proper, the effect of para 4-5, sch 5 UC Regs is that receipt of earned income within the qualifying period will result in the qualifying period resetting. This is because the receipt of earned income disqualifies a claimant from entitlement and the qualifying period is defined as a period of nine APs in which the claimant “would otherwise qualify for the inclusion of an amount calculated under this Schedule in their award”.

The DWP seem to have intended that the same rules would apply to LMI and that is how they operate the system in practice.

However the LMI regs do not have that effect, because the qualifying period is not defined in the same way. The regs exclude someone who is in receipt of earned income from being offered LMI (reg 3(4)) and they cause LMI to cease where the claimant receives any earned income (reg 9(3)(e)). However, the definition of the qualifying period for LMI purposes is different to that used in UC proper because it does not refer to the need to have had a notional entitlement to an LMI offer during the qualifying period. It is simply defined materially as “nine consecutive assessment periods in which a claimant has been entitled to universal credit”.

Your client would not qualify for housing costs under UC proper because they have (on the face of it) received earned income during the 9 month period, but because that is not the test which is applied for LMI, they should have an entitlement to be offered LMI should they wish.

Thanks - this post and the link to the other threads is really helpful. I will send in a request for a MR based on the arguments that the qualifying period is 9 months on UC, accepting that no payment should be made for the AP in which the earnings was received, but that this does not start the clock anew, and distinguishing from the regulations on help with service charges etc for Owner Occupiers, where they do explicitly start the clock again.  It looks as if this argument has been successful at at least two First Tier Tribunals, and it would be interesting to see what happens at any further stage - can’t find any UT decisions on this at present.