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Forum Home  →  Discussion  →  Income support, JSA and tax credits  →  Thread

£56K capital for essential adaptations to home (2 disabled children)

JojoMitchell
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I’m looking for some guidance or case law.  A caller sold her property for £106K, £50 was used to purchase her new home and £56K is to be used for adapting the new property (she’s put in planning permission).  She and her two son’s completed the sale of her new home in December 2017 and have not fully moved in to their new home as in its current state it is not suitable for her 2 disabled children.

She has provided proof of her capital and the reasons for having it and its usage and is worried that her Income Support will stop - the DWP told her that this scenario had not come up before and probably her income support would stop and she would have been overpaid.

The Income Support (General) Regulations 1987 reg 8 state:

8.  Any sum—
(a)
paid to the claimant in consequence of damage to, or loss of the home or any personal possession and intended for its repair or replacement; or
(b)
acquired by the claimant (whether as a loan or otherwise) on the express condition that it is to be used for effecting essential repairs or improvements to the home, and which is to be used for the intended purpose, for a period of 26 weeks from the date on which it was so paid or acquired or such longer period as is reasonable in the circumstances to enable the claimant to effect the repairs, replacement or improvements.

Caller is hoping that the DWP DM will accept Reg 8(b) but the “or otherwise” is open to interpretation.  It doesn’t state how or from where this money was acquired.  Unfortunately I don’t have the Sweet & Maxwell book so not sure how this could be interpreted.

Any ideas?

Paul_Treloar_AgeUK
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1) It’s actually para.8 of Sch.10 of the IS (General) Regs that you’re quoting.
2) Commentary in Sweet and Maxwell isn’t terribly helpful to your case- it has CSB 975/1985 as showing it may not be claimant’s capital anyway, but that’s about a loan, not proceeds of a sale, as well as R(SB) 14/81 which is also about a secured loan, but then there’s this one which falls squarely against the scenario stated.
3) R (SB) 14/85 deals with a very similar situation.

The claimant had sold his previous home and joined with his son and daughter-in-law to buya house next door to theirs and to modernise and convert it into 2 flats, one of which was intended for his own use. After paying his share of the purchase price of the new house he banked the balance of the proceeds of the sale of his former home to meet the costs of conversion and renovation. The adjudication officer decided that the money banked fell to be treated as a capital resource and that because its value exceeded the prescribed limit the claimant was not entitled to supplementary benefit.

In his decision, Commissioner Hallett finds at para.8(2) that:

Sums to be used for building work, amenities or fitting up may be “essential repairs or improvements to the home” in terms of regulation 6(l)(g)(ii) (set out, together with regulation 6(l)(b) in paragraph 4 of this decision). But in order to qualify under regulation 6(l)(g)(ii) the sum must have been “given or loaned” to the claimant or his partner. Proceeds of sale received by such a person are accordingly not within that prescription.

4) However, the terms of the Supp Ben regulation in this decision and the Income Support Schedule are subtly different, in that, as you note, para.8 is worded differently. The reference to “otherwise” in conjunction with “acquired” does, I feel, potentially distinguish this scenario and is arguable, despite the decision above.

5) The obvious difficulty for me is that, notwithstanding addressing why proceeds from a sale are dealt with expressly elsewhere in the Schedule,  how can she demonstrate that she acquired this money “on the express condition that it is to be used for effecting essential repairs or improvements to the home” - where is the express condition arising from?

[ Edited: 29 Mar 2018 at 08:01 pm by Paul_Treloar_AgeUK ]
JojoMitchell
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Her previous home had to be adapted which was sold as they needed more space as her disabled children have grown substantially.  The express condition is from the client - the money isn’t to be used for anything else.  Not sure what else I can add.

Paul_Treloar_AgeUK
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To me, that shows an intention as to how to spend the excess proceeds, rather than an express condition of acquiring the money.

As I say, I think it’s arguable, but I think you’re going to need to deal with that aspect head on.

JojoMitchell
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I see what you mean…thanks Paul.  The caller said that she will take all the way to the Court of Appeal!

HB Anorak
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Para 3 of Schedule 10 could help as well:

“Any sum directly attributable to the proceeds of sale of any premises formerly occupied by the claimant as his home which is to be used for the purchase of other premises intended for such occupation within 26 weeks of the date of sale or such longer period as is reasonable in the circumstances to enable the claimant to complete the purchase”

The argument would be that in the context “purchase” includes not just the acquisition of the site but the completion of any works necessary to make it possible for the claimant to occupy the dwelling as their home.  Otherwise, there is a perverse lacuna between paras 3 and 8:

- para 3 covers the scenario where you use all the money from the sale to buy the new home
- para 8 covers the scenario where, having bought the new home and moved in, you borrow more money for the specific purpose of making it properly ready for occupation

It cannot have been the policy intention to exclude a scenario falling midway between, where the proceeds of sale of the former home are sufficient to fund the works as well.

JojoMitchell
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I had considered this too, the DWP have told her that as the sale was completed she could not rely on this!  She has moved some things in but “lives” with her parents nearby…

Paul_Treloar_AgeUK
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I wondered that as well but the decison quoted at para.8(1) states:

This disregard is limited to proceeds intended to be used, within the prescribed time, for the purchase ‘of another home. It does not extend to proceeds put into an investment account for later use by the purchaser on “necessary building work and amenities” or costs for “fitting up” a flat.

And in this case, the Supp Ben regs and the IS Schedule are worded in a much more similar, although not identical way. It does strike me as paradoxical as you say however.

[ Edited: 29 Mar 2018 at 08:02 pm by Paul_Treloar_AgeUK ]
HB Anorak
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What a pity.

This extract is pretty much what I was suggesting:

Counsel for the claimant sought to support the tribunal’s conclusion that “home” imported a completed home and not a mere shell. In his submission, regulation 6(l)(g)(ii) was not exhaustive and it must have been intended that “purchase”, in regulation 6(l)(b), should include the cost of the works done after the shell has been acquired, in order to make a completed home. There could, he submitted, be a two-stage purchase under which (1) the shell was bought and (2) the home was completed.

But that argument was rejected.  At least it’s only Income Support that goes west in this situation - no capital limit for tax credits so it might be feasible for the claimant to survive by using a little bit of the conversion works fund to live on: assuming entitlement to the Carer Premium, just over £100 a week which is not as bad as it would have been if she was already on UC.

past caring
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Nothing to add other than a tactical consideration…...though the time before she can complete the works will to an extent be governed the need to get planning permission and by the time the builders take to complete, she would be as well getting the work done and paying for it asap, so reducing her capital below limit. If the works also involve the purchase of specialist equipment that will be installed in the home, she may wish to purchase this before it is installed. And even a reputable building firm will require a payment of some money in advance for the purchase of materials etc. All things which could result in her becoming entitled again that much sooner.

Whilst there might be a risk with this of the DWP deciding deliberate deprivation, I think she could win any appeal - if the operative purpose in disposing of the £56k is to provide a home which will meet the needs of her disabled children, then the purpose of disposing of that sum sooner rather than later is to ensure the money is actually available to be used to pay for the cost of conversion, rather than being used up on living costs. In other words, becoming entitled to IS sooner is then not a significant operative purpose but an entirely fortuitous consequence. At least that’s how I’d argue it….

Paul_Treloar_AgeUK
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past caring - 29 March 2018 12:35 PM

Nothing to add other than a tactical consideration…...though the time before she can complete the works will to an extent be governed the need to get planning permission and by the time the builders take to complete, she would be as well getting the work done and paying for it asap, so reducing her capital below limit. If the works also involve the purchase of specialist equipment that will be installed in the home, she may wish to purchase this before it is installed. And even a reputable building firm will require a payment of some money in advance for the purchase of materials etc. All things which could result in her becoming entitled again that much sooner.

Whilst there might be a risk with this of the DWP deciding deliberate deprivation, I think she could win any appeal - if the operative purpose in disposing of the £56k is to provide a home which will meet the needs of her disabled children, then the purpose of disposing of that sum sooner rather than later is to ensure the money is actually available to be used to pay for the cost of conversion, rather than being used up on living costs. In other words, becoming entitled to IS sooner is then not a significant operative purpose but an entirely fortuitous consequence. At least that’s how I’d argue it….

I agree with you. Get the work done asap, but not without ensuring its of a proper quality and appropriate for the situation described.

HB Anorak
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Thought people might like to hear an update on this case.  Client tracked me down from this thread and I agreed to help because it seemed so unfair. We had two arguments at FtT:

1. HRA 1998 allows Tribunal to depart from R(SB) 14/85 and use s3 to fill what is clearly an unintentional lacuna.
2. Move took place within two years of RTB but Council waived discount penalty in view of exceptional circumstances.  Client hit on the clever argument that the Council in effect provided funds equal to the discount waiver. Got letter from RTB section confirming they wouldn’t have agreed this if she hadn’t needed the money for adaptations.

Tribunal this morning accepted 2. above and client has just spoken to RTB team who say the penalty would have been £57,000!  So that wipes out the disputed capital - and client came up with the winning argument herself as it turned out. Good job as Tribunal didn’t buy my HRA argument.

Nice result.

JojoMitchell
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Great news for SS.  She will be so relieved.  Are you able to post more on the RTB reasoning as none of us came up with that!

[ Edited: 17 Sep 2018 at 02:38 pm by JojoMitchell ]
Paul_Treloar_AgeUK
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Nice one Peter, good work.

HB Anorak
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JojoMitchell - 17 September 2018 02:34 PM

Great news for SS.  She will be so relieved.  Are you able to post more on the RTB reasoning as none of us came up with that!

This brought £57,000 within the scope of para 8 of Schedule 10 to the Income Support regs: money provided on condition it is used for repairs etc. She would have had to repay 80% of the discount otherwise. One thing I hadn’t realised was that the Council gets a share of any increased value when the discount is repaid, which helps in this case because it increases the amount disregarded under Sched 10.8

DWP’s PO seemed happy enough with this result too.