Housing costs - Capital disregard - “Property not occupied as the home for a time” - Purchase-price resulting trusts

We’ve been referred the case of a client with a UC capital issue. She owns a home outside of London, and rents in London close to her mum, who has significant care needs. An argument was raised by another adviser on MR, which is almost certainly doomed. I thought I’d run it by the discussion forums and see whether I’d missed anything.

Client claimed UC including housing costs in July 2020 after she lost her job due to the pandemic. She received a negative entitlement decision on 9 March 2021 because she held capital in excess of the prescribed limit which could not be disregarded. This was in the form of the house outside London, which she had purchased in 2015 after her five brothers had pooled together to lend her the money, as recompense for caring for their mum. It was anticipated that she repay this sum to her brothers at some point in future. The property is now valued on the open market at close to £200k.

She moved to this property outside London, living there for a short period, but returned to London when it became clear that her brothers could not care for her mum.

She has claimed cbESA since 5/3/21 and this is her only income at present.

The argument that the adviser tried to run at MR was that the value of the property outside of London can be disregarded on the basis of H2038 of the ADM:

H2038 Premises usually occupied as the home are disregarded if
1. they are not occupied for a time and
2. the intention is to return to live in the premises as the home.
For example, if a person goes into residential care on a temporary basis and intends to return to the
house which the person usually occupies as the home, the house is disregarded.

This seems problematic as a matter of fact (to what extent could she really be said to be ‘usually occupying’ the house outside of London, versus the one in London? I think this is to give the concept of ‘intention’ more autonomy than it really has in the context). And even if it was arguable that the house outside London was her ‘home’, this would surely doom any claim for housing costs, as she’d have to be arguing ‘normal occupation’ at the London flat to get housing costs for it (because of Sch.3, para. 1 of the UC Regs).  Her two options seem to be: she normally occupies the home outside London and can’t get housing costs in London, or she gets housing costs in London and the value of the property outside London is taken into account, disentitling her. This seems to be the conclusion from this thread: https://www.rightsnet.org.uk/forums/d/13664/viewthread/14176/#66501

Turning to the equity situation in the house outside of London,  I was just wondering whether there might just be an argument along the lines of CIS/1294/2016 & CH/1291/2016 regarding the valuation of capital. Since her 5 brothers jointly contributed towards the purchase price of the property, and she contributed only a “nominal” amount, would it suffice to show that the purchase price contribution had not been a gift to constitute a purchase-price resulting trust, such that she could be argued to hold the property on trust for her brothers in shares proportionate to the value of their contributions? How could this be evidenced/established (i.e. that the house had not been a gift)? Would consideration (the repayment obligation) be enough?

I think the first argument fails for the reasons you give.

The point from the case you cite re resulting trusts is that a resulting trust is (outside of the Jones v Kernott scenario which doesn’t apply here - see para 62) presumed. It is therefore not strictly necessary for your client to prove that the money was not a gift - it would be for the presumption to be rebutted by evidence.

That said, it would be helpful if it could be proven not to be a gift. For instance if there was written material from the time of the purchase dealing with the terms on which the money was being handed over. Usually you would expect a conveyancer to make some enquiries of anyone contributing to the purchase price for anti-money laundering purposes.

I would expect the FtT to test the evidence as to whether the presumption really holds up - would your client be saying the same thing if one of her brothers went bankrupt and the trustees in bankruptcy were trying to claim his stake in the house or would it suddenly become a gift? How did she expect to repay the brothers? etc - but otherwise the advantage of a presumption is that you win if there is no clear evidence either way.