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Non commercial agreement and RTB
Ok so this is a bit of a complicated one and not sure if there is a case…
My client is eldery disabled gentleman, through the right to buy scheme he bought his property, his son paid for it and the mortgage was the son’s but the property remained in the fathers name. After the min 3 years the ownership of property was passed to son through solicitors and now legally belongs to the son. All was fine for a couple of years until the son had a cut in hours at work and couldn’t afford to pay mortgage so was thinking of selling property.
Father then approached council to make homeless application and was told he may be entitled to HB (LHA to be specific), he applied for this and it was awarded, the council advised client what rent should be. Client did not have lease so I guess the council accepted this was commerical agreement although not sure how this was decided! Once the sons hours went back up they voluntarily cancelled the claim.
Client is now in the same situation as sons hours have significantly dropped and he either needs rent to pay mortgage or will need to sell. The client made a new HB but this time it was refused and a large HBOP created for earlier period as client did not previously tick the box in application to say he previously owned the property. During last claim it was within the 5 year period for new claim ownership was transferred over 5 years ago.
So my question is, do we have a case to appeal HBOP and is he entiled to HB now. Any thoughts or suggestions would be helpful.
From a common sense point a view it would make sense for the council, if the son has to sell, the father will need to be moved to sheltered accomodation this will likely be more expensive.
I do not think he is entitled to HB now, because he would be treated as not being liable to pay the rent on the basis that he was paying rent to a close relative (i.e. the son) who also lives in the same dwelling. The landlord is regarded as living in the dwelling with him , if they shared some accommodation other than a bathroom, toilet or a hall or passageway. The local authority may also construe the arrangement as being non-commercial, though this is an arguable point.
Therefore your client may have been overpaid not only on the basis that he had owned the property within 5 years of the previous claim, but also because he was renting from a close relative in the same dwelling. Did your client declare on the form that the landlord was his son? If he did, then the local authority may have made an official error, in not taking into account the information it had at its disposal in allowing the claim. The client would not have contributed to this error because he had declared it. And this may be a basis of appeal. However, if client failed to make this disclosure, then the local authority would not have made the error as they would have been unaware of the facts.
For clarity, son is landlord but does not live in the same property, sorry for confusion. But yes I may be able to argue official error, possibly, but I guess that he isn’t entitled now. Thanks for response.
For clarity, son is landlord but does not live in the same property, sorry for confusion. But yes I may be able to argue official error, possibly, but I guess that he isn’t entitled now. Thanks for response.
Sorry for the misunderstanding and making assumptions! If they do not live in the same dwelling, then the close relative bit does not apply, and potentially he could be entitled now. However, local authority may refuse if they consider the agreement to pay rent is not on a commercial basis, or if they consider that the liability to pay rent has been created to take advantage of the HB scheme. In which case the decision could be appealed.
He was therefore overpaid because less than 5 years had elapsed since his owership of the dwelling. As client failed to declare this it would be difficult to argue official error.
However. I’m pretty sure I didn’t dream this but I think the right to buy discount gives the father a beneficial interest in the property which, if true, might take him above the capital limit. The relevant case might have been Springette v Defoe (HL) 1992 but I can’t find that case anywhere. Maybe someone will confirm it or correct me.
I have always assumed this to be the case and used to advise clients about it back when I was a real solicitor (and encourage them to have a proper declaraion of trust drawn up too).
The fact that rent is only being charged, and housing benefit being claimed while the son is out of work is the problem. That clearly shows that they are trying to take advantage of the HB scheme, in its truest sense. If they hadn’t cancelled the claim the first time the son went back into work, there would be no problem. By cancelling, they have made it appear that the only reason for the claim, and any rental liability is to take advantage of HB to pay the mortgage. Unless dad can show evidence that he is paying the same level of rent the rest of the time, and that the timing of the claims is purely coincidental to the fact the son is out of work, I wouldn’t hold out much hope.
From the info he has given me, it in no way looks like a commercial agreement, no lease, no rent until the son can’t afford the mortgage. Surprised HB was awarded in first place. The original OP was only created due to the 5 year rule of ownership, so will check the dates for this and if correct OP seems recoverable from client.
Unless he can show commercial agreement now there seems no chance for HB, in which case the client will need to move out and into a council tenancy or private let where he will be entitled to full HB, just seems a shame since he has lived in the property 50 years and is quite unwell and will likely cost the council more to house him elsewhere.