Shared ownership - Service charge and ground rent - PC or HB?

My client is on guarantee PC and is looking to sell her house to part buy 50% of a retirement flat.  All the capital she makes from the sale of her house will be used to purchase the 50%.  She will be liable to pay rent on the remaining 50% and also ground rent and service charges.  She will still be entitled to PC.  As the landlord is not a Housing Association she will come under the LHA scheme which will not cover the full cost of rent.
My question is, as LHA is less than her contractual rent, will PC pay housing costs for the ground rent and eligible service charges?

Hi all- raising this whole shared ownership and HB or PC for service xharges malarkey

Peter (HB) has I believe previously advised on differences between shared ownership and shared equity but cannot find link - client I have   resides in   a shared equity property with a HA  
He owns 75% - remaining 25% is dealt with when property is sold- no rent paid to HA butthere are very high service charges my client is stuggling to pay

If he is eliglbe to claim HB for these his award would me more generous than what PC would give him

grateful for any help

If we really are talking about shared equity, that will be viewed as owner occupation in the social security system.  It’s a variety of mortgage, but instead of the purchaser borrowing money from the lender, the lender acquires an equitable stake in the property.  The householder is the sole legal owner of the property, but as a trustee for the benefit of themselves and the lender in appropriate shares.  The tenure will be either freehold or a conventional long lease.  If there are service charges payable, that suggests a long lease.  These will qualify (eventually) for a UC owner’s housing element, if the claimant is still on UC by then. The charges can also be included in the applicable amount for legacy benefits and PC assuming they are eligible in nature.

Shared ownership is entirely different and really isn’t any kind of “ownership” at all.  What you have is an assured tenancy for which you pay a premium of anything up to 75% of the property’s value.  You pay rent and service charges to your landlord.  I believe the rent either stops or reduces to a peppercorn ground rent if the premium paid is as high as 75% .  Should you fail to pay your rent and service charges you can face mandatory possession for two months’ arrears.  You then walk away with nothing - because you don’t “own” anything.  Shared ownership charges attract HB or UC renter’s housing element.

I am guessing that what you have just described is actually shared ownership and not shared equity - in which case it’s HB/UC.

thanks for the quick reply Peter

I have just seen   some of client’spaper work- one of which does use the term “older peoples shared ownership” and includes following info:

gross rent - nil of 75%
initial market value £190k
intiial percentage - 75%
max percentage- 75%
premium - the sum of £142,500.00  

so it looks lie client can claim HB for the sc’s

many thanks again

Yes, definitely HB!

Matches this case we published yesterday by the looks of it - https://www.rightsnet.org.uk/welfare-rights/caselaw/item/whether-a-lease-which-restricted-ownership-to-75-per-cent-of-the-value-of-the-property-and-with-no-rent-payable-could-be-a-shared-ownership-lease