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Buying extra land on UC

unhindered by talent
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Client, owner-occupier on UC, wishes to draw down from a pension pot to buy a small piece of land worth £6000 next to his home. The land would then be fenced in and part of his garden. Would this piece of land always be counted as capital as it wasn’t originally in the deeds?

Elliot Kent
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This is quite an interesting question. The UC Regs allow a disregard for “premises occupied as the home”. The regs don’t seem to offer any further definition as to what that means (c.f. the equivalent legacy disregards and “dwelling”). It must be capable of including land associated with the premises to some extent. I am not immediately convinced that the fact that the land would be registered separately automatically means that it can’t be included as part of his ‘premises’ if in practice it is part of the land that is functioning as his home.

I suppose it might be relevant why it is that he wants to buy it. E.g. if its value is solely in allowing some route of access to his house or something like that.

I think there is caselaw dealing with some similar issues but couldn’t tell you off the top of my head. I will try to remember to come back to it if someone doesn’t beat me to it.

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Thanks for that. The intention is to preserve access to a parking space that is currently not disputed as the land is part of a rental property and the tenants haven’t been interested in quibbling over the use of the land as it isn’t adjacent to the property. The rental property is about to be sold, however, and so the new owners may wish to assert their right to use the land.

Elliot Kent
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I would think, or would argue anyway, that in those sort of circumstances he would be able to rely on the disregard on the basis that it would form part of his dwelling in a common sense type view - i.e. you would say that he owns his house with an associated parking space; as opposed to owning (a) his house and (b) an unrelated parking space. If he comes to sell, he would presumably sell them together.

I don’t think that the fact that he ends up with two separate parcels of land from a conveyancing perspective is necessarily determinative - some houses end up covering more than one title entry for whatever reason and it doesn’t necessarily pose an issue.

But as I say perhaps needs further research.

unhindered by talent
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It does seem common sense to incorporate it into the whole, after all nobody at DWP is checking what size your garden is for the home you normally occupy.

Gareth Morgan
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Curtilage is the magic word.  I had a complicated argument about this but that was over 30 years ago.

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Ah, thank you. Looking at HMRC’s take on curtilage it says ’ When setting down the ‘curtilage test’ emphasis was placed on the smallness of the area. So buildings standing around a courtyard together with the main house will be within the curtilage of the main house. Where such buildings have a residential use, they will be included within the entity making up the dwelling-house. It is important to remember that in order to be part of the entity of the dwelling-house, the building must have a residential purpose regardless to its closeness to the dwelling-house.’
Source: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64245

So an argument could be made (if needed) that if the client encloses it and it’s used for parking, it should fall within the scope of the capital disregard for premises occupied as the home

Diogenes
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https://cornerstonebarristers.com/wp-content/uploads/old/co-6180-2016-burford-v-ssclg-&-anr-23-06-17-approved.pdf

Burford v SSCLG

extract
The challenge to the Inspector’s decision is essentially a rationality challenge, (as to
which see R (on the application of Newsmith Stainless Ltd) v Secretary of State for
Environment, Transport and the Regions [2001] EWHC Admin 74, per Sullivan J at
para 6). Whether something falls within a “curtilage” is a question of fact and degree
and thus primarily a matter for the decision maker (see Dyer at para 33 above, and
Skerritts at para 36 above). It was for the Inspector to decide what weight should be
given to each of the relevant factors (see Lowe at para 37 above). I am satisfied that
on the evidence the Inspector was entitled to conclude that the land on which the
building subject to the enforcement notice was not on land comprising curtilage of the
dwelling house because it “was physically separated from [other land] by fences and
hedges at least until November 2015” (DL19). The land was therefore unattached to
the land surrounding the dwelling house and not forming one enclosure with it.
“Curtilage” is an area of land “attached to” a house and “forming one enclosure with
it” (see Dyer at para 34 above and Lowe at para 37 above).

[ Edited: 16 May 2024 at 01:48 pm by Diogenes ]
Stainsby
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Sch 10 (1) of the UC Regs provides for the value of premises occupied as the claimant’s home to be disregarded, Sch 10(2) provides that only one set of premises can be disregarded

Sch 10(1) IS Regs and Sch 6(1) HB regs use the term dwelling rather than premises and similarly provide for only one dwelling to be disregarded

Premises is not defined in the UC Regs and so should be given its normal every day meaning which according to Collins is “a piece of land together with its buildings”

I agree with the other contributors that there is a strong argument to disregard the value of the annexed piec e of land simply on the basis of the defintion of premises, but I think that UC could still argue that the annexed piece of land is not part of the premises occupied as the home

This is because Sch 3 paragraph 1 UC Regs provides

The occupation condition: the general rule
1.—(1) The general rule is that a claimant is to be treated as occupying as their home the accommodation which the claimant normally occupies as their home.
(2) Subject to the following provisions of this Part, no claimant is to be treated as occupying accommodation which comprises more than one dwelling.
(3) Where none of those provisions applies and the claimant occupies more than one dwelling, regard is to be had to all the circumstances in determining which dwelling the claimant normally occupies as their home, including (among other things) any persons with whom the claimant occupies each dwelling.
(4) “Dwelling”–
(a) in England and Wales, means a dwelling within the meaning of Part 1 of the Local Government Finance Act 1992
(b) in Scotland, means a dwelling within the meaning of Part 2 of that Act.

It seems to me that “accommodation” “dwelling” and “premises” may well have the same meaning once it is established that they are being occupied as part of the home.

Reg 2(4) HB Regs provides

(4) For the purposes of these Regulations, the following shall be treated as included in a dwelling–
(a) subject to sub-paragraphs (b) to (d) any land (whether or not occupied by a structure) which is used for the purposes of occupying a dwelling as a home where either–
(i) the occupier of the dwelling acquired simultaneously the right to use the land and the right to occupy the dwelling, and, in the case of a person liable to pay rent for his dwelling, he could not have occupied that
dwelling without also acquiring the right to use the land; or
(ii) the occupier of the dwelling has made or is making all reasonable efforts to terminate his liability to make payments in respect of the land;
(b) where the dwelling is a caravan or mobile home, such of the land on which it stands as is used for the purposes of the dwelling;
(c) where the dwelling is a houseboat, the land used for the purposes of mooring it;
(d) where in Scotland, the dwelling is situated on or pertains to a croft within the meaning of section 3(1) of the Crofters (Scotland) Act 1993(a), the croft land

It appears that for the purposes of HB, including both entitlement to HB and the capital disregard, the person must have acquired the rights to the land at the same time as the right to occupy the dwelling

I cannot find an equivalent provision in the UC Regs, but I would not be surprised if a UC decision maker read something along those lines into them.

If we accept for one moment that the annexed land is not part of the premises occupied as the home, it will be necessary to put a value on that land once it is annexed.  The value will be what a willing buyer would pay for it on the open market.  The land may well be near worthless once it is annexed and fenced off

In other words it is only worth £6000 to the claimant because of the use it would have.  It would not have the same use value to someone else  

There could be no market at all for the land once it is annexed so the value is arguably nil

[ Edited: 16 May 2024 at 02:31 pm by Stainsby ]
Diogenes
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perhaps if it is not accepted as part of teh dwelling it can jut be counted as a possession and treated as such, if he bought a caravan and put it at the side of eth road it would be a possession surely and disregarded unless of the intention rules

is the fact that it a bit of land a problem, trying to get it into his curtilage might not be worth the effort ???

comment !!!

John Mesher
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I happen to be in the middle of trying to rewrite the notes to Sch.10 to the UC Regulations in the Sweet & Maxwell Vol.II to cover para.1 in more detail. Afraid I don’t think that curtilage is the magic word and is far too restrictive. The magic word is the word in para.1, i.e. “premises”, a word that can have a very wide meaning. I think the use of the word in Sch.10 and not “dwelling” was deliberate and designed to avoid some of the past technical issues about the scope of that word when considering disregards, so that there is no need for any cohesion with the different words for different purposes in Sch.3.

I suppose that thoughts of notional capital could rear their heads. Once the claimant gets his £6,000 from the pension pot it would not be disregarded as capital (para.13 of Sch.10 not being applicable). Then, even if paid out very quickly to purchase the land (capital value disregarded), there would be a deprivation and no purchasing of goods or services under reg.50(2). But given the reasons for buying the land there would be a good argument that it was not for the purpose of securing entitlement to universal credit or increasing its amount.

Stainsby
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To answer Diogenes
This simply wont work
See R(H)7/08 attached here

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Diogenes
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Held, allowing the appeal, that:

1. the tribunal had erred in law in failing to deal adequately with the issue of whether the caravan was a personal possession and therefore to be disregarded under paragraph 11 of Schedule 5 (paragraphs 21 and 22);

2. the caravan was capital for the purposes of the housing benefit and council tax legislation (paragraphs 23 to 28) but fell to be disregarded as a “personal possession”. Having regard to the context of the words and the history of the legislation, “personal possessions” mean any physical assets other than land and assets used for business purposes (broadly the same conclusion as was reached in CPC/370/2006) (paragraphs 53 to 55).

JonUCN
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If it helps, “accommodation” for UC, and a “dwelling” for HB, should be each capable of comprising separate and self-contained “premises” (WRA s11(2)(c), and SSCBA s137(1), respectively).

As alluded to above, there is case law to say that “premises” has a wide meaning, and can include land without any buildings, though I don’t know if that’s necessarily safe to rely on in this context.

Diogenes
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I concur with JM comment however I think I would be far less generous in determining deprivation, buying a bit of land to safe guard your parking spot would not pass the test of reasonableness for me

not sure why the caravan point wont work, it looked like it was classed as a possession from the case law, does it mean land >>> or specifically land use for business purposes ?????

anyway it was only an example,

[ Edited: 16 May 2024 at 03:43 pm by Diogenes ]
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Thanks, folks. A lot to think about here. Plan B was the hope that the land is pretty worthless to anyone else and so wouldn’t be too much of an issue capital-wise even if there are issues around deprivation and notional capital.

Stainsby
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I can see that it is held in R(H)7/08 at [53]

53. My conclusion is that “personal possessions” mean any physical assets other than land and assets used for business purposes

There is no comma after “land” so it reads as if there is a functional link between land and business purposes

The reason I think that treating the land as a personal possession wont work is because its also held at [38]

38. The closest authority to the facts of this case is that of Mrs deputy Commissioner Rowley in CPC/370/2006. That case concerned a static caravan on a private site. The issue arose whether its value could be disregarded as capital for the purposes of state pension credit. The tribunal decided that the caravan was not a personal possession, but more in the nature of a second home. The Deputy Commissioner decided that that was wrong in law:

“9. There is no definition of the phrase ‘all personal possessions’ in the legislation. It has been considered by the learned authors of Sweet and Maxwell’s Social Security Legislation. In their commentary upon the same phrase contained in paragraph 10 of Schedule 10 to the Income Support (General) Regulations 1987, they express the view that ‘presumably anything which is not real property is a personal possession.’ In my judgment that must be right. It seems to me that the intention of the legislation is to distinguish between realty and personalty. The provisions on capital frequently refer to ‘premises’ – there is a range of disregards in respect of ‘premises’ – but where none of these applies, premises fall to be taken into account as capital. Thus, ‘personal possessions’ must mean any physical asset owned by a claimant which cannot be described as ‘premises’

I don’t have a copy of CPC/370/2006 and have not been able to find it in the usual places

Diogenes
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OK, well forget the caravan , its a red herring, the above ‘caravan’  cases are about residence not possession, BUT as S and M suggests anything other than “real property” is a personal possession I suppose we are stuck with this bit of land being “real property”,

so yes it may be capital for ever to refer to the first point in the thread, all the stuff about being part of the home in which the claimant lives and so being disregarded will have to go into the melting pot if the UC award needs to be challenged but looking at the Authorities above it looks dodgy to me that buying a bit of land next to where you live and putting a fence around it makes it part of your dwelling, what if he had bought 20 acres next door and fenced it off ???!!!!

the case law I mentioned above seems to suggest in the 3 point test its the history and use of the land that counts , anyway I nice little case for whoever is lucky enough to be taking it on.

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Fortunately, this scenario is at the ‘theoretical’ stage at the moment. Thanks, all!