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Treatment of capital
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Welfare rights - Financial Inclusion and Advice Service, Suffolk County Council
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Case as follows: Mr X lives with his partner and x2 children in rented accommodation (with rent arrears). He has been refused Housing Benefit because he is a joint owner of another property with his estranged sister (joint beneficial owners) who lives in the property. She is on JSA and has two school age children herself. She has no intention of moving and cannot buy her brother out. He has also been refused IrESA and surviving on other benefits. He has no money to buy her out or pay a lawyer to seek an Order for Sale of said property. District Valuer has indicated that value of his share is £30K but no evidence of a market for a part share of a property put forward.
Impending tribunal, all thoughts and opinions gratefully received
Market value is the amount someone would be willing to pay for it - with the sister living in it, it’s very unlikely anyone would pay anything for it so I would argue that it’s market value is £0.
CPAG references Commissioner’s decisions - R(SB) 18/83, R(SB) 57/83 and R(SB) 6/84
I haven’t had a chance to look at the decisions but hopefully they will be of help.
Good luck!
edit - paras 14 and 15 of R(SB) 18/83 look quite useful in saying the value is only what you can realistically realise - given sister and kids are staying put it isn’t realistic for him to realise any
[ Edited: 31 Jul 2019 at 03:19 pm by Daphne ]forum member
Information and advice resources - Age UK
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Don’t forget Judge Jacob’s decision in Reigate and Banstead Borough Council v GB (HB): [2018] UKUT 225 (AAC) which covered amongst other things, whether or not someone can establish a value for something that might be difficult to sell due to someone else still living in a property.
19. I do not understand why there has to be a local market. There is a market for investment in interests that do not allow immediate exclusive possession. That may not be widely known among claimants, but it has been referred to in a number of Upper Tribunal decisions. It may not be easy to produce evidence of that market, but its existence is not in doubt.
This folowed one of his earlier decisions CH/1815/2016 where he held:
10. I have read the commentary on regulation 51 in CPAG’s Housing Benefit and Council Tax Reduction Legislation (28th edition 2015/2016). It is, I think, rather too pessimistic about the possibility of placing a value on a part share when the joint owner does not wish to sell. Since the decisions cited, the Commissioners and subsequently the Judges of the Upper Tribunal have, through their experience of cases, become aware of markets that exist for investors in such shares.
before going on to quote extensively from the case of Wilkinson although note, the Wilkinson case was about inherited property rather than property jointly owned but the owners have now separated, so could be distinguished on the facts.
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Welfare rights - Financial Inclusion and Advice Service, Suffolk County Council
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Yes you would think so! The point you make below has been the basis of my submission on this case but the DV has purportedly considered this and still arrived at £30K (Part 2 of the form LA2 asks the DV what they have considered when assessing the market value of the share and ticked almost every box A-K)
‘Market value is the amount someone would be willing to pay for it - with the sister living in it, it’s very unlikely anyone would pay anything for it so I would argue that it’s market value is £0’.
Thanks for the references though, I will look through them, re read Findlay etc. rock and a hard place comes to mind!
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Welfare rights - Financial Inclusion and Advice Service, Suffolk County Council
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Yes the Jacobs decision is not particularly helpful, suggesting that there are indeed markets for such shares in a property and have looked at Wilkinson’s decision too, although the circumstances are different.
As I mentioned Finlay has been v helpful in guiding me on this case
Yes, we know now that “current occupants will never sell” is no longer sufficient to simply count the property as being worthless. We need to consider the value of your client’s interest to a speculator.
As a prior point, you aren’t clear on what you mean by “joint owner”. That is pretty much a meaningless term as far as property law goes. Is your client a joint tenant or a tenant in common? If he is a tenant in common, what is his percentage (or other) stake in the property? In any event, is there anything in the history which would suggest that your client ought to have a greater or lesser beneficial stake in the value of the property? etc. etc.
But lets assume that your client is a tenant in common with a 50% stake in the value and there is no complicated history at all. It is just a house which has fallen out the sky.
There are two ways that your client’s interest might have a value.
The first is that your client (or somebody who bought his interest) could take action under the Trusts of Land and Appointment of Trustees Act (TOLATA) to try and realise their stake in the property by forcing a sale. The three points are, first, that it is very expensive to take action under TOLATA (i.e. five figure sums in legal fees), second that there is no guarantee of success because it is entirely discretionary (and one of the factors which needs to be considered is the interests of any minors living in the property - s15(1)(c) - which tends to suggest that a sale would not be ordered if the children currently living there have nowhere to go) and third that an unsuccessful action under TOLATA might just leave your client (or the purchaser) with costs for the other side to pay. I think that it is very likely that the remote prospect of getting the house sold under TOLATA would be virtually worthless to a speculator, given that there is only £30k equity in play.
The other is that your client (or the nominal purchaser) could just sit around and wait for the freehold to be eventually sold. I do think that this would have some saleable value as an investment. Odds are that the house will be sold at some point and a savvy investor would surely pay something to take advantage of that. But this would only be sensible if our investor is going to get many times their return. The prospect of paying £10k now to hopefully get £30k at some point in the next 40 years is a pretty bad deal. But maybe someone would pay £1,000 in the hopes of getting 30 times their investment back. Certainly I can’t see any remote possibility of anybody paying £16k for this sort of interest.
Edit: I would endorse John’s approach in this thread : https://www.rightsnet.org.uk/forums/viewthread/9623/
[ Edited: 31 Jul 2019 at 05:24 pm by Elliot Kent ]forum member
Caseworker - CHAC, Middlesbrough
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I’ve run arguments on this a couple of times now once for JSA and once for CTR. I was also going to do it for HB but the Council revised their decision after they lost the CTR appeal. I’d endorse Elliot (and John in the linked thread) approaches as they’re along the same lines to mine which has seemed to reach a sympathetic audience with Tribunals. The judges in both cases were significantly less than impressed with the quality of the valuation provided by the District Valuer which when coupled with the arguments around who would actually buy such a share when they’d be unlikely to be able to realise it for many years (in both cases my clients were in no position to force a sale and the resident owner wouldn’t sell so you’d be looking to sell to an investor) led to relatively easy victories (the Judge in the JSA case had decided before we walked in the room that we’d won!).
I wasn’t aware of the Judge Jacob’s decision cited above but I’d still be confident about success with the above argument.
In terms of caselaw I relied, most recently, on MN v London Borough of Hillingdon (HB) [2014] UKUT 0427 (AAC) in particular paragraphs 20 and 30. I also used CH/1953/2003 and in particular paragraphs 13, 15 and 16 of that decision.
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Welfare rights - Financial Inclusion and Advice Service, Suffolk County Council
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Thank you Elliot and others for your help on this matter. Really appreciated.
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Hi CHAC, back to the good old days of 2019, did you take yours to a Valuation Tribunal for CTR on the capital value, I am in a similar position with one at preset