claiming HB while possessing capital

i met a tenant who lives in one of our housing association porperties but who owns a house outright in her own name only. she left that property approx 10 years ago when she left her abusive and violent husband and he remains living at that house

she has no contact with er ex husband but doesnt want to sell the property as she’s afraid of what reaction it may cause in him as he also has suicidal/serious depressive episodes. also, they have an adult daughter and her relationship with her father is good and my client doesnt want to do anything to disrupt that relationship

she has tried unsuccessfully to claim HB so pays the rent herself although she’s on a low wage. in around ten years she’s going to reach retirement age and is concerned that she wont be able to pay the rent, won’t be able to claim HB nor possibly pension credit

she visited the CAB who (apparantly) told her she could sign the owned house over to her daughter and that after seven years this would no longer affect any claim for benefits and HB would pay her claim.

i never deal with clients who own property so am a bit clueless but i cant find anything that relates to what the CAB said in any CPAG or Chris Smith HB books. it sounds more like a plan to avoid inheritance tax to me rather than a solution to the HB situation, and also wouldn’t the transfer of property to her daughter create a deliberate deprivation of capital to claim future benefits?

any thoughts or help greatly appreciated. thanks

has anyone any thoughts

The advice from the CAB is somewhat regrettable and should simply be ignored.  In her case legal ownership by itself is irrelevant.  The question is, does she have a beneficial interest?  It used to be the case that she’d had to have contributed to the purchase price, mortgage payments or paid for substantial improvements or repairs.  The law has moved on in recent years and the courts are more flexible following Stack v Dowden and Jones v Kernott and will take account of other contributions to the household finances.  She needs to see a solicitor to find out what, if at all, her beneficial interest is likely to be.  It is by no means unusual for someone to put up the money while someone else takes legal title.

Who has decided on the value of the house?

The value of the house is not necessarily a 50/50 split. If one joint owner wants to sell and the other doesn’t then the value is less.

Realistically who is going to buy half a house that they will have to potentially share with someone they don’t know or that they can’t rent out - I can’t see it happening unless the buyer was an investor.

I would be going along the lines of the value being basically worthless unless the other party can be forced to sell.

CPAG mentions that if the asset is a house, the value of any deemed share may be very small or worthless, particularly if the house is occupied and there is a possibility that the sale of the property cannot be forced. This is because even a willing buyer could not be expected to pay much for an asset they would have difficulty masking use of or selling to someone else.

Plus, if client does seek legal advice as per Nevip, she should be deemed as ‘taking reasonable steps’ to dispose of her interest in the property so whatever the actual value of her share (and I agree that the true value could well be negligible) it should be disregarded for up to 26 weeks (or longer if reasonable to do so).

the house is owned solely by my client. her ex husband remains living in it but does not own or part own it.

she thinks it’s worth approx £130K

I’d still suggest she contacts a solicitor. Even if it is in her sole name he may have a beneficial interest in it. Again, if she does this, she can argue she is taking steps to realise the asset (and thus attract the disregard).

‘The question is, does she have a beneficial interest?  It used to be the case that she’d had to have contributed to the purchase price, mortgage payments or paid for substantial improvements or repairs’

CL is the legal owner of the property. Beneficial ineterst applies to those who do not legally own a property.

I’m afraid that’s incorrect.  A person can have both legal and beneficial ownership of property.

thanks for your replies. it’s clear i need to refer her to a solicitor for some legal advice regarding her house