Claiming HB for property you are joint owner of?

If this is a freehold house and the joint ownership will be legal ownership (as opposed to a beneficial interest under a trust) absolutely not because the claimant will be caught by the definition “owner” and payments by an owner are ineligible to be met by HB.

If it is some other arrangement it’s not impossible that HB would be payable, but it will certainly raise questions:

- HB is only payable for payments that are made as a condition of the right to occupy the dwelling.  Would the daughter be in a position to evict the mother if the payments were not made?  For example, if they are joint tenants under a long lease, I don’t think one leaseholder is in a position to evict the other
- If the claimant has a beneficial entitlement under a trust, does that include the right to a share of rent income?  If so, the commerciality of the arrangement seems questionable
- Payments to a trustee of a trust of which the claimant is a beneficiary are excluded from HB by default: the onus is on the claimant to persuade the Council that the arrangement has not been created to take advantage of the HB scheme

Thanks Peter, think I’ll say it’s very unlikely and link to your post.

Paul_Treloar_AgeUK - 17 January 2023 04:25 PM

COAG cites R(IS) 4/95 but can’t find the case but seems to indicate this wouldn’t be possible due to joint owner being daughter (who resides elsewhere I should say also).

Thoughts or the Commissioner’s Decision much appreciated,

R(IS) 4/95

Formerly CIS/454/1993

Housing costs - loan applied to secure removal of Class F land charge - whether applied for the purpose of “acquiring an interest” in the home
A social security appeal tribunal had to determine whether the claimant was entitled to housing costs for interest payments on various loans, including a loan of £15,000 taken out to pay his wife for the removal of a class F land charge. They held that thus charge was an interest in the dwelling occupied as the home to terms of paragraph 7(3) of Schedule 3 of the Income Support (General) Regulations 1987, entitling the claimant to housing costs for interest payments due on that loan. The adjudication officer appealed to a social security Commissioner.
Held that:
reading section 1(3) of the Law of Property Act 1925 in conjunction with section 2 of the Matrimonial Homes Act 1983, and considering Wroth v. Tyler [1974] CH 30, a class F land charge was not an equitable interest within the scope of section 1(3) of the Law of Property Act 1925. It was a mere right of occupation and not an interest in the dwelling house. The class F land charge registered by the wife did not constitute the ownership of an interest to be acquired. Accordingly the claimant had not applied the £15,000 for the purpose of “acquiring an interest in the dwelling occupied as the home” for the purposes of paragraph 7(3)(a) of Schedule 3.
The appeal was allowed. The Commissioner substituted her own decision that the claimant was not entitled to housing costs for interest payments due on loans which he had taken out.

Found the decision on the Upper Tribunal website

Nice one, thanks Gareth and Derek, much appreciated.

If the daughter is freehold owner and isn’t living there, would it be possible for her to grant your client a shared ownership lease and get HB on that basis? I’m not sure, but I don’t think there is any requirement that a shared ownership lease has to be with a social housing provider - I’m sure somebody will know if I’m wrong about this.

Timothy Seaside - 18 January 2023 11:35 AM

If the daughter is freehold owner and isn’t living there, would it be possible for her to grant your client a shared ownership lease and get HB on that basis? I’m not sure, but I don’t think there is any requirement that a shared ownership lease has to be with a social housing provider - I’m sure somebody will know if I’m wrong about this.

Really don’t know the answer Timothy but the adviser did contact us calling it a shared ownership query - I’ve replied for now linking to this thread and suggested seeking some professional legal advice about their options regards the actual ownership.

i thoughht shared ownerships properties could only be offered by hosuying associations or similar, trather than an individual - the rents charged are calculated and rent increases capped in a similar way to HA rents

https://www.gov.uk/shared-ownership-scheme/finding-shared-ownership-home

Also - Mum is currently renting the property and has a lump sum () presumably more than £16k) due from sale of former property

buying into the daughters house sounds like deprivation in a roundabout way - Mum already has a tenancy agreement and can live at the property.

Why would she buy a % of that to still have to pay rent?? She already has a right to live their ( as per tenancy) and shared ownership wouldn’t particularly give her a “stronger” right as if she fell into rent arrears she could still be evicted -0 sounds like a sassy way of getting the lump sum of capital disregarded a=so HB can continue..
Maybe im just being cynical….
But hopefully it wont get into that level of consideration as dont think the shared ownership will daughter is a goer anyway.

This is probably more Tim/Elliot territory, but I don’t think there is anything to prevent private individuals or companies entering into an agreement that has the characteristics of a shared ownership lease (a long lease acquired for a premium based on a percentage of the full value, with the rent on a sliding scale inversely proportional to the premium).

It is possible that private shared ownership leases might lack some safeguards for both landlord and tenant that would apply in the regulated social sector - I haven’t searched extensively, but there is a lot of stuff about shared ownership in the H&R Act 2008 for example which appears to apply only to regulated social housing.  And is stamp duty an issue maybe?  I did wonder whether the Leasehold Reform (Ground Rent) Act 2022 would prevent the mother charging more than one peppercorn as ground rent under a shared ownership lease.  But in that Act, the definition of shared ownership doesn’t seem to exclude private leases, so as far as I can see it would be lawful for the rent to exceed one peppercorn under a new private shared ownership lease.

I agree with Prisca that the question of deprivation would involve consideration of whether the rights acquired are in proportion to the amount paid compared with how things were before.

HB Anorak - 18 January 2023 05:56 PM

This is probably more Tim/Elliot territory,

I have no idea. Shared ownership is icky at the best of times and I would not think it is likely to be appropriate as between private individuals, even if it is possible. My suspicion is that there would need to be bespoke drafting of a functional lease and you would be spending close to five figures just on the conveyancer’s fees.

I was a little bemused by the references above to R(IS)4/95 as I am not really sure that it is on point. I think Paul’s case is resolved by the more straightforward points that (a) you can’t let a property to yourself and (b) even if you could, there could be no HB for it per reg 12(2)(c). Even if the tenant has only a minority stake in the equity, they would still be a joint legal owner of the property and it does not make sense to speak of renting the other person’s ‘share’.

Prisca - 18 January 2023 05:11 PM

i thoughht shared ownerships properties could only be offered by hosuying associations or similar, trather than an individual - the rents charged are calculated and rent increases capped in a similar way to HA rents

https://www.gov.uk/shared-ownership-scheme/finding-shared-ownership-home

Also - Mum is currently renting the property and has a lump sum () presumably more than £16k) due from sale of former property

buying into the daughters house sounds like deprivation in a roundabout way - Mum already has a tenancy agreement and can live at the property.

Why would she buy a % of that to still have to pay rent?? She already has a right to live their ( as per tenancy) and shared ownership wouldn’t particularly give her a “stronger” right as if she fell into rent arrears she could still be evicted -0 sounds like a sassy way of getting the lump sum of capital disregarded a=so HB can continue..
Maybe im just being cynical….
But hopefully it wont get into that level of consideration as dont think the shared ownership will daughter is a goer anyway.

That’s a very good point actually - I’d not considered the deprivation angle as such.

Current property is disregarded under rules around divorce and then 26-week disregard can apply as proceeds used to purchase another property but then seeking to claim rent could trigger that kind of decision I suppose. Trickier than it first appeared, clearly.

Elliot Kent - 18 January 2023 09:22 PM

HB Anorak - 18 January 2023 05:56 PM

This is probably more Tim/Elliot territory,

I have no idea. Shared ownership is icky at the best of times and I would not think it is likely to be appropriate as between private individuals, even if it is possible. My suspicion is that there would need to be bespoke drafting of a functional lease and you would be spending close to five figures just on the conveyancer’s fees.

I was a little bemused by the references above to R(IS)4/95 as I am not really sure that it is on point. I think Paul’s case is resolved by the more straightforward points that (a) you can’t let a property to yourself and (b) even if you could, there could be no HB for it per reg 12(2)(c). Even if the tenant has only a minority stake in the equity, they would still be a joint legal owner of the property and it does not make sense to speak of renting the other person’s ‘share’.

It’s another one of those strange CPAG references - when I read the case, I couldn’t see any connection between the statement in the Handbook and the outcome of that case.

I can’t see any deprivation problem if the shared ownership rent was worked out as a proportion of the current rent inverse to the share. That’s basically the whole point of shared-ownership, and the Regs specifically allow for it. Depending on what type of tenancy she currently has, she might get much better security of tenure with shared ownership.

As I said previously, I’m not aware of anything that would stop a private individual from granting a joint ownership lease - it is just a lease that happens to include a sort of rent payment term. On the issue of legal practicalities and conveyancing, I think Elliott is probably right - you might struggle to find a solicitor willing to take it on, and if you did it could be very expensive because of the apparent novelty of the circumstances.

There is another potential barrier - if the daughter has a mortgage then the lender will have something to say about the arrangement. Of course it’s possible that she’s already in breach of her mortgage conditions by letting the whole property out.

To be honest, I only really suggested this as an interesting diversion. It’s not something I would advise without a whole load of research.