Capital: Transferring ownership of a house to children: Disregards prior to transfer?
Hi, I’m relatively certain I know the answer to this issue but I wanted to get a second opinion as it’s not an area that I deal with particularly often.
The circumstances are as follows. I have a client who previously lived in a housing association property for many years. During 2012/13 as a result of the bedroom tax (it’s three bed and they’re only entitled to one bed now all the children have grown up and moved out) it was getting hard for them to afford to stay there. The children were regularly bailing them out and paying off arrears due to the bedroom tax plus the client was finding it hard to manage their finances generally due to some mental health issues. So the children clubbed together and gave them enough money to use Right to Buy to buy the property outright with the intention being that the client would live there permanently (described as a “forever home” by the client to me). The children would be transferred ownership of the property after five years (the client says that’s the earliest they could make the transfer due the rules of Right to Buy?) and so that would be how the children get their money back in time. The sale went through at the beginning of 2014.
Fast forward to the end of last year. The area that the house is in has apparently gone down hill with more anti-social behaviour generally and with some of it targeted at the client. The police are seemingly no help and with the family and client increasingly worried about her physical and mental well-being whilst living there decide to move her from the property into one owned by one of her children. The client lives alone in the new property and doesn’t pay rent or similar to the child as the child is happy covering the mortgage themselves and considers it only right to look after the client.
At the beginning of this year the DWP get wind of what’s happened and decide that the client has excess capital as they own a property that they’re not living in. Client does MR and appeal as they feel that this is unfair as they left due to the anti-social behaviour and the property is being transferred to the children anyway.
So, my question is, are there any legs to challenging the decision that the client has excess capital due to this property? I don’t think that any of the disregards from Schedule 9 of the ESA Regs apply (apart from perhaps paragraph 6 but that feels like a reach?) and I don’t think I would be able to argue that the property has been over valued and a true valuation would be below the capital limit. Whilst I can see why the client feels aggrieved my view at the moment is that as long as the house is in their name it would be part of their capital and the DWP decision is therefore correct. Anyone able to offer any suggestions or is the clients appeal dead in the water?
(Client is currently in the process of signing the property over to the children and they’ve been warned regarding notional capital if it’s decided they did it to gain benefit. But I feel that I can mount a reasonable argument to defend against that.)
I think there is an implied trust here (perhaps even a quistclose trust). If you can evidence it properly, I would think you have an extremely good chance of winning.
Evidence would include:
1. source of funds used to buy property
2. the necessity for her to buy it
3. statements from her and kids that the intention was for it to be transferred to the kids at first available opportunity
Now that’s not an angle that had occurred to me. I’ll read up on the links and have a further conversation with my client around the evidence they’ve got. Thank you!