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SMI payments to a lender where the owner occupier is temporarily in hospital or a secure hospital

Judy Scott
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Can anybody out there help me with a rather obscure matter?

As I understand matters (please correct me if I am wrong!)

-  payments for a mortgage interest loan to the lender can continue for up to 52 weeks when a person who is in hospital or a secure hospital is intending to resume occupation of their home.

- as I understand matters the SMI can continue to be paid even though entitlement to other benefits has ended.

People in hospital or secure hospitals are sometimes paid for ‘service user involvement’. This is participation as ‘Experts by Experience’ in monitoring the quality of services or designing new services.

The maximum amounts of such payments may be set by the NHS Trusts to be within the Permitted Work limits for ESA currently £125.50 a week and for less than 16 hrs a week although it would be rare for involvement and payments to be more frequent than fortnightly for a limited number of months.

CPAG says that SMI is not a social security benefit.
So is SMI means tested? Would a £20 a week disregard apply?

All advice and links to the relevant Regs if any would be extremely welcome.

Judy Scott

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Elliot Kent
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All of your answers are in the Loans for Mortgage Interest Regulations 2017.

If the claimant stops receiving a relevant means tested benefit, then LMI stops - reg 9(3)(a).

The circumstances in which a claimant can be paid LMI during an absence differ depending on whether they are a legacy benefit or UC claimant - so a 52 week absence whilst in hospital would be acceptable for an ESA claimant but not a UC claimant - Schedule 3, para 10.

An ESA claimant who earns within the permitted work limits would continue to qualify for LMI because all they need to do is remain entitled to ESA and remain living in (or treated as living in) their accommodation and permitted work doesn’t stop the ESA award - Reg 9(3).

However, a UC claimant who brings in any earned income at all immediately ceases to qualify for LMI - Regs 3(4) and 9(3)(e).

Judy Scott
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Elliot
Thank you for your careful reply. Can I ask again of you or any other experts if payments for a mortgage interest loan are treated as a means tested benefit or not. I ask this because CPAG say that SMI is not a social security benefit.
For instance if the owner occupier is in receipt of ESA and earning up to £125.50 a week would they be expected to pay towards the cost of the SMI with £20 disregarded.
Thank you
Judy

Daphne
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Hi Judy

The loan for mortgage interest is not a benefit but you have to be entitled to a qualifying benefit - IS, irESA, ib JSA, PC or UC - to get it.

So in your example, as Elliott says, because the person is still entitled to irESA as they are earning below the permitted work limit they have access to the loan - it works very similarly to the old SMI except that it’s a loan.

You might find it helpful to look at the explanatory note at the end of the regulations - http://www.legislation.gov.uk/uksi/2017/725/note/made

[ Edited: 29 Jan 2019 at 09:48 am by Daphne ]
Judy Scott
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Many thanks Daphne
Judy