Person entitled to dispose of the fee simple

If it’s a freehold property in England or Wales it is true that any registered joint owners of that freehold title would be caught by the “fee simple” rule even if the beneficial interest belongs to someone else.  But in a sheltered scheme it is more likely to be a long lease.  They would not be excluded from HB under the provision about making payments under a long lease, because the payments under the long lease (rent and service charge to the HA or LA) are not what they want the HB for.  However, there is still a difficulty about HB covering payments between joint long leaseholders ... if they don’t pay, what legal right has he to evict them?  The consequences of failure to pay might simply be that he no longer stays away.  Are these therefore not the right kind of payments to attract HB?

When Ariadne was here she would have been able to offer great insight in a case like this.  If you are still out there Ariadne, what are the consequences when joint long leaseholders fail to abide by the financial aspect of an agreement they have made among themselves as to who occupies and who stays away?  And does it make any difference if they are joint tenants or tenants in common with defined beneficial shares?

Reg 12 (2) (c) of the HB Regs says that HB shall not be payable in respect of payments by an owner. Reg 2 defines owner as the person who is entitled to dispose of the fee simple, etc.

http://www.bailii.org/ew/cases/EWCA/Civ/2004/1510.html

This decision is useful with regard to the reasoning behind the refusal of HB, there are quite a few decisions out there as well.

If it is a freehold interest that Mr and Mrs H have and they are tenants in common then they are owners for HB purposes as regards being able to dispose of the fee simple, along with Mr P but, yes, would only be entitled to sell their equitable share.  If Mr and Mrs H, and, Mr P are joint tenants then they are all one legal entity and cannot dispose of their share separately from the whole.  Either way, they are still owners for HB purposes.  See the link for what is necessary to create a joint tenancy. 

Shared ownership schemes are a separate breed and will usually be granted on a leasehold basis.  Thus the tenant-owners are not owners for the purposes of regulation 12(2)(b).  They are tenants under a long tenancy but would not be caught by regulation 12(2)(a).  So HB is payable for these schemes.

http://www.inbrief.co.uk/land-law/coownership-land-law.htm

Many thanks to all contributors, I am happy now that they cannot be owners for HB purposes because the flats are on a 99 year lease from 1994 (housing association confirmed). However, I think there are still significant problems here - I cannot see how the “rent” falls within regulation 12(1).

As tenants in common, Mr and Mrs H have equal right to occupy the property with the other joint owner, irrespective of the percentage share. As the guidance Paul kindly highlighted says -

“each tenant has the right to occupy all of the land. One tenant in common cannot exclude another from a certain part of the land or restrict the use of any part of the land even if one tenant in common may have a larger share than the others.”

I don’t think the payments are “rent” as they do not really arise out of a tenancy, because whatever tenancy has been drawn up (presumably on a standard shorthold assured tenancy) only gives them rights of occupation that they already have.

Ditto for payments in respect of a licence or permission to occupy the dwelling; and none of the other payments at regulation 12(1) apply (12(1)(d) having a more restricted meaning than would appear on the face of it)

Any thoughts?

Thanks

Brian

How many leases are there, between whom, what are their terms and when where they created?

What I know is that the housing association granted 99 year leases on the flats in that building in 1994. The arrangement between the landlord Mr P, and the HB claimants, was a shorthold assured tenancy for (I think) a 6 month initial period earlier this year

I haven’t got any further information becuase it isn’t a case where we have actually seen Mr and Mrs H and looked at any evidence/documentation they hold, not that they fully understand what is going on. Thir daughter didn’t seem to know much more.

I have suggested that the couple appeal as the basis for the original decision is incorrect. HB will then decide whether or not there are housing costs within regulation 12(1) I would think, as well as considering commerciality, etc (although I think, for reasons not in the post, that is unlikely to be an issue).

I don’t know this area of law, but it does seem unlikely to me that you can create a tenancy between two parties with equal rights of occupation

So, is this correct?  P owns the property on a lease.  Then rents it to Mr and Mrs H on an assured shorthold tenancy and they move in.  At the same time P sells them 1% of the property.  If so, P has foregone his rights of occupation for the length of the tenancy and the periodic payments made to P are for the use of the land and, therefore, rent.  Or is there something I’ve missed?

Paul, I think P and the Hs all jointly own the long lease (but with P owning the lion’s share of the beneficial interest).  Notwithstanding the joint lease, P purports to have granted a subtenancy to the Hs which as a matter of law cannot permit them to occupy the dwelling because they already have that right as joint tenants or tenants in common under the long lease.  Therefore failure to pay the “rent” under the “subtenancy” would not have eviction as a consequence and so it is hard to see where it fits into the scheme of eligible payments in Reg 12(1).  In effect what they are doing is compensating P for not taking up his own right to occupy.

There is a Commissioner’s decision that looks at the situation where the claimant had the right to occupy under the terms of a trust (CH/1578/2006) and made payments under a separate agreement to the other person who also had the right to occupy.  The conclusion is that the payments are not in scope for HB.

CH/1197/2009 is a very close match for the facts of your case (payments between joint leaseholders), but it does not take a view on the natuire of the payments because the case was remitted to the First-tier Tribunal for a different reason

I wonder if the payment could be turned into a service charge of some sort with ‘a condition on which the right to occupy the dwelling depends”

I’m veering towards the hbanorak view here, but we can but wait and see. Has anyone got a copy of CH/1179/2009? I can find CH/1578/2006 but no the other one

Garvey: I think the part-owned-part-tenanted description refers to a type of long lease known as “shared ownership”.  Under a shared ownership lease, there is an initial premium paid to the freeholder to buy the lease and the level of rent charged depends on the amount of the premium: the higher the premium, the lower the rent.  The tenants thinks of himself/herself as having bought a percentage stake in the property and that is usually how the sliding scale rent v premium is expressed: 90% premium = 10% of the full rent payable; 10% premium = 90% of full rent payable etc.  It is also considered a form of ownership because the lease can be assigned for money i.e. you can sell it to someone else.  It is ultimately one lease with rent payable to one freehold landlord who can evict you if you don’t pay your rent.

The difference in the case we are discussing here is that the person to whom Mr and Mrs H are liable to pay rent under a shorthold tenancy does not appear to have the right to evict them if they don’t pay because they are joint holders of the long lease.  The only person who could evict Mr and Mrs H (along with Mr P) is the HA that owns the freehold.  For that reason I am not sure that describing the payments as service charges will help - it will still be the case that the liability is to someone who cannot make occupation dependant on payment.

Sovietleader: I am attempting to upload the document, it will come out in a funny format that is not a proper word document but it does open in word.

Yeah, it’s kicked into place for me too.  I was confusing myself over the shared ownership issue.

HB Anorak
- many thanks for that

Regards

Brian