Capital value of a share in a property
I have a client who is a pensioner claiming Housing Benefit. She has a 50% share in a property which is currently empty and furnished.
She lives elsewhere and claims Housing Benefit (which has now ceased).
Reading between the lines I think she may have left due to domestic abuse and the property was previosuly disregarded but is now counted as capital as her husband (who was the occupier) has now passed away.
He has left his 50% to a trust of which his son is beneficiary (currently in probate).
She has advised that she does not intend to return to live in the property and she may decide to rent it out in the future and possibly get a small mortgage to do it up.
There isn’t any intention to dispose of it however I have advised that if she takes a mortgage and rents it the capital value will be disregarded and half of the rental income (less encumbrances) used for her HB.
I cannot see that there is any disregard at this time to enable her to continue to claim HB.
She is also now liable for the council tax on the property.
I would not have been so confident in advising that. There are a number of issues to consider here:
1) As it is in probate, and because she has only a share in the property, the value - today - of her share is likely to be very low. Has HB stopped because of the value of the property?
Is she confident that the trustees will agree to retention of the property and its rental?
Why are you so confident that it will be treated as a business asset producing income? There is a lot of case law that suggests the situation is not so clear?
She has a PoA who has confirmed that one option is for them to rent out the property together in this way. A decision hasn’t been made by them at this stage. The Housing Benefit ceased when they advised that she owned the property however, they did not advise at that stage that the other share was held in trust or was in probate, just that her son owned the other half which we now know is incorrect!
This information was provided when I started to ask additional questions so I am trying to work out what the intention is and I think we will request a revaluation to see if we can reinstate her HB as you say, if the value is tied up it is likely to be worth less.