Forum Home → Discussion → Universal credit administration → Thread
Capital Disregard for share of house
Client inherited 25% of family home in 2010. Brother has another 25% and father has 50% and they live in the home with the father’s new son who is at primary school.
Client is employed and lives with partner and three children in a council property. UC assessed value of his share in house as £47,250 after sale costs.
In 2013 client claimed JSA and HB. HB got VOA valuation which said client’s share was worth about £14K based on the house being worth £190K - taking into account other factors such as difficulty of realising value, people living in the house, etc. So HB paid his rent but he had to go to tribunal to get JSA (which he won).
It seems that UC are using the exact same argument on valuation that JSA did - i.e. that it is simply a question of knocking 10% off the value of the house and then finding 25% of that. We’re going to tribunal on that point now, although we’re having to rely on the 2013 VOA report, and I’ve got a couple of other adjustments that we’ll try to apply.
In the meantime, I’ve suggested that the client could rely on the disregard in Para 6 of Sch 10 UC Regs if they are “taking reasonable steps to dispose” of it. They had already been to an estate agent who laughed them out the door. I am thinking if they can get an estate agent to list it for £51K (which is what UC say it’s worth) then it ought to be disregarded. And if no estate agents will list it, then they should still get the disregard because they will have shown they are taking reasonable steps (even if those steps aren’t getting anywhere). Can anybody see any glaring holes in my plan?
Can’t fault your logic. If DWP think the property is worth £X and he is doing everything he can to to sell it for £X without success, then either he is acting reasonably in trying to sell at that price or DWP were wrong to value it at £X.
I suspect the sticking points are:
(1) No estate agent is ever going to agree to this; and
(2) It’s the DWP, so there is no guarantee that a logically coherent series of decisions will be made
This is UC so I’m not expecting a reasonable response from the DWP but if they agree then all is good. Failing that this will at least be a back up plan for a further appeal (and in fact it’s potentially better than the other appeal because it could get the capital disregarded completely, rather than just reducing its value to below £16K).
The client emailed me this morning to say that none of the local estate agents were seizing this rare opportunity to market a 25% share in an occupied potential do-er upp-er. But I’m getting ready to argue that approaching estate agents and being flatly refused is evidence that they have started taking reasonable steps to dispose.
[ Edited: 22 Nov 2019 at 03:22 pm by Timothy Seaside ]Was the property inherited through a will?
I may be wide of the mark as I don’t know the dynamics, but it would seem prudent to me if drafting a will which left property, that I would ensure that there was a life tenancy for whoever was living in the property or needed to use the property as a residence. If the will gives a life tenancy to the father, then the the property or the value of the property is held in trust and not realiseable until the trust ends.
Just thought
Was the property inherited through a will?
I may be wide of the mark as I don’t know the dynamics, but it would seem prudent to me if drafting a will which left property, that I would ensure that there was a life tenancy for whoever was living in the property or needed to use the property as a residence. If the will gives a life tenancy to the father, then the the property or the value of the property is held in trust and not realiseable until the trust ends.
Just thought
It was a will, yes, but there was no trust. It was simply the mother leaving her whole estate (i.e. 50% of the house) to her two sons. It doesn’t sound as though she was concerned about what happened to their father.
The appropriate guidance as to valuation can be found in the ADM at H1638-1643. this would appear to give you scope to argue an effective market value of £0. This is, of course, just guidance but gives a useful list as to what the DM should expect from the valuer, so you could pick apart the valuation using this. It therefore doesn’t appear necessary to go down the disregard by way of “reasonable steps to dispose”,route but rather use this as a back up to first getting them to look at the effective market value. The estate agent evidence supports the zero valuation, as they indicate there would not be a willing buyer so that leaves you with the only possibility of purchase being from the other relatives and they may not be able to afford to do so. Your argument is strengthened if this is, as per other comments, linked to a trust or provision in the will.
The appropriate guidance as to valuation can be found in the ADM at H1638-1643. this would appear to give you scope to argue an effective market value of £0. This is, of course, just guidance but gives a useful list as to what the DM should expect from the valuer, so you could pick apart the valuation using this. It therefore doesn’t appear necessary to go down the disregard by way of “reasonable steps to dispose”,route but rather use this as a back up to first getting them to look at the effective market value. The estate agent evidence supports the zero valuation, as they indicate there would not be a willing buyer so that leaves you with the only possibility of purchase being from the other relatives and they may not be able to afford to do so. Your argument is strengthened if this is, as per other comments, linked to a trust or provision in the will.
I think Timothy’s point is that, the valuation case having failed so far - pending a tribunal in 9-12 months time which he will probably win - he wants to now seek to secure a disregard to protect the client’s position in the interim (and possibly for the longer term if the FtT values at £6k+).
The problem in these cases is always that the share in the property does, objectively, have a value in excess of £0 but that there is no easily accessible marketplace for buying and selling partial stakes in property. You are looking essentially for a speculator who is prepared to take a punt on the off-chance that it pays off down the road, but you can’t just go to esotericpropertyinvestments.com and list it there and unless you regularly hang around with wealthy investors or brokers, you aren’t going to be able to reach the right people. So the question is, what can the man in the street do to show that they are trying to dispose of their interest? Going to estate agents and trying to sell seems a reasonable step.
[ Edited: 27 Nov 2019 at 11:33 am by Elliot Kent ]
The only thing I would add is that it is almost certainly worth trying to get one or more of the estate agents to commit to writing their advice that there is no market for a 25% share in 23 Railway Cuttings and that they therefore decline to market the property. They may want paying to put that in writing, but it won’t be much. Has the advantage of establishing that the client has in fact taken all reasonable steps and - in the event that you are really unlucky and this gets before a tribunal that isn’t fully up to speed - that there isn’t a market. That last point ought to be obvious to any tribunal that knows what it is about, but you’ll still encounter the odd one that needs to be led by the nose….