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Shared Ownership Service Charges

WHA
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Hi all, looking for a definitive answer on this.

We have a development with a number of self-contained retirement flats around a communal lounge, all of which are shared ownership with a 70:30 ownership ratio (70% owned by the resident).

We do not charge any rent on the 30%, but do have service charges which relate to the upkeep of and utilities to the communal lounge, along with the cost of a warden and also emergency pull-cords in the flats themselves.

I’ve spoken to one of the residents who has been told Pension Credit will help them with the cost of the service charges, and another who has been told this should be Housing Benefit.

There seems to be little infomration around about when Pension credit will cover these type of charges, and the regulations don’t seem particularly clear to me. However, the HB regs do seem to cover these as long as they are a condition of living at the property (as far as I can see all of the charges are theoretically eligible for HB).

So which is it, PC or HB?

HB Anorak
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HB - definitely

WHA
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Money Advice Officer, Warrington Housing Association, Warrington

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Thanks - asked for a difinitive answer, was not disappointed 😊

WHA
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Hi, reviving this as we’ve finally received a decision refusing Housing Benefit because:

“You have no rental liability, therefore Housing Benefit cannot be paid. Housing Benefit must be in payment before service charges can be considered by us.”

Can anyone point me in the right direction with this? Do I have a case to appeal?

HB Anorak
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Yes, appeal: they are wrong.

HB is payable if, inter alia, the claimant is liable to make payments in respect of a dwelling: s130, SSC&B Act 1992.  It is left to Regulations to define “payments in respect of a dwelling”: s 130(2).

In the HB (Persons who have attained the qual age for SPC) Regs 2006, Reg 11(1) says HB is payable in respect of the payments set out in Reg 12(1).  Reg 12(1) then lists various payments, and HB is payable in respect of any of them.  Rent is on the list, so are service charges which are payable as a condition of occupying the dwelling (i.e. if you don’t pay you could get evicted).  Nothing says that you have to be liable for something else apart from service charges - if service charges are the only item on the list for which the claimant is liable, HB is still payable.

Reg 12(2) then excludes certain payments that would be eligible under Reg 12(1), including payments under a long tenancy … but this exclusion does not apply to payments under a shared ownership tenancy: see Reg 12(2)(a).  Therefore, HB is payable for service charges under a shared ownership tenancy.

Councils often get confused by shared ownership.  They are led astray by the term “ownership”, which is really just a marketing gimmick as what the claimant has is a tenancy with some characteristics of a conventional long lease (bought for a premium, may be assigned to A N Other for a premium, fixed term of 100+ years) and some of the characteristics of an assured tenancy (especially mandatory possession for 8 weeks’ arrears).

Assuming the penny drops and they award HB, watch out for the next mistake of only allowing 30% of the charge on the basis that the claimant “owns” 70% of the property and the charges are for the 30% s/he doesn’t own.  Again, this is misconceived and based on a flawed understanding of the nature of shared ownership.  It’s not like there are two “things” here - an “owned” thing and a non-owned thing.  There is just one “thing”: a long tenancy acquired for a premium equal to 70% of the value of a conventional long lease.  The charges payable under that tenancy are eligible for HB.  End of.

WHA
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Many thanks for your comprehensive response. I can’t believe we’ve waited 4 moths for a nonsense decision.

Gareth Morgan
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WHA - 09 August 2019 09:17 AM

I can’t believe we’ve waited 4 moths for a nonsense decision.


I expect they flew by :-)

JoW
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I have been advised previously (although can’t remember by whom) that either PC or HB can pay service charges in these circumstances and if no rent for HB to pay usually easier to get PC to pay.

Stainsby
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I agree with Anorak.  It is definitely HB for service charges in shared ownership

Shared Ownership Tenancy is defined by HB (SPC) Reg 2 as

(a)  in relation to England and Wales, a lease granted on payment of a premium calculated by reference to a percentage of the value of the dwelling or the cost of providing it;

(b) in relation to Scotland, an agreement by virtue of which the tenant of a dwelling of which he and the landlord are joint owners is the tenant in respect of the landlord’s interest in the dwelling or by virtue of which the tenant has the right to purchase the dwelling or the whole or part of the landlord’s interest therein

HB (SPC) Reg 12(1) lists the payments that are eligible for HB.  This includes service charges (Reg 12(1)(e) )

Reg 12(8) defines service charges as “periodical payments for services, whether or not under the same agreement as that under which the dwelling is occupied, or whether or not such a charge is specified as separate from or separately identified within other payments made by the occupier in respect of the dwelling

HB (SPC)Reg 12(2) provides:

(2) A rent rebate or, as the case may be, a rent allowance shall not be payable in respect of the following periodical payments–
(a) payments under a long tenancy except a shared ownership tenancy
(b) payments under a co-ownership scheme;
(c) payments by an owner;
(d) payments under a hire purchase, credit sale or conditional sale agreement
except to the extent the conditional sale agreement is in respect of land; and
(e) payments by a Crown tenant.
(f) payments by a person in respect of a dwelling where his partner is an owner
of that dwelling.

Owner is defined by Reg 2 as

(a)in relation to a dwelling in England and Wales, the person who, otherwise than as a mortgagee in possession, is for the time being entitled to dispose of the fee simple, whether or not with the consent of other joint owners;

(b) in relation to a dwelling in Scotland, the proprietor under udal tenure or the proprietor of the dominion utile or the tenant’s or the lessee’s interest in a long tenancy, a kindly tenancy, a lease registered or registerable under the Registration of Leases (Scotland) Act 1857(a) or the Land Registration (Scotland) Act 1979(b) or a tenant-at-will as defined in section 20(8) of that Act of 1979;

I am not familiar with Scottish law, but in England and Wales a long leaseholder (i.e someone with a long tenancy) cannot be an owner as defined by Reg 2 (see CH296/2003 at [29]

So there we have it HB cannot be paid in respect of a long tenancy except where the tenancy is a shared ownership tenancy .

As the tenancy we are discussing here is a shared ownership tenancy as defined by Reg 2,  HB is payable

The corollary here is that Sch II (5)(10(a) of the State Pension Credit Regulations ( Housing cost not met)  provides that no amount may be met in respect of housing benefit expenditure. 

So service costs must be met by HB in shared ownership.

It does not matter what proportion that share is (unless the claimant “staircases” to 100%)

I personally have never seen anyone manage to get to 100% because the cost of the extra share is not the cost it was when the first share was bought but it is linked to the price of the whole at the time the extra share is bought.  In other words house price inflation has tended to increase the cost of buying the extra share

By the way don’t wait 4 months for another nonsense decision give them 28 days from when you submit the appeal and no longer

Arm yourself with CH/2812/2005, CH/3947/2005 and MB v Wychavan DC[2013] UKUT 67 (AAC)  where you will find ample advice about how to get things moving ( You can (re) submit your appeal direct to HMCTS and ask for Directions if the LA have not forwarded the appeal and provided their submission within 28 days)

In my opinion this is not a complex appeal where the facts are unclear or involving a difficult matter of law so the LA has no excuse for their delay

[ Edited: 14 Sep 2019 at 10:10 am by Stainsby ]
Rebecca Lough
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Sorry to revive this. Where do we stand on UC covering these in the context of shared ownership?

Stainsby
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The claimant is a renter for the purpose of the UC housing cost element for service charges (UC Reg 26(5))

[ Edited: 17 Nov 2022 at 06:05 pm by Stainsby ]
HB Anorak
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Stainsby - 17 November 2022 12:50 PM

The claimant is a renter for the purpose of the UC housing cost elemnt for service charges (UC Reg 26(5))

With the very important difference that all of the services appearing in Category A are eligible for shared ownership tenants, whereas conventional renters only get external upper storey window cleaning in that category.