Client has claimed HB since moving into property in 2003 and has not previously applied for HB. client has lived with current partner for last 20 years. Client owns a property with his ex wife. Client is not receiving any capital from the property that his former wife and adult children are living in, nor is he paying anything towards it and has not done since moving out. Clients former partner continues to occupy the dwelling as her and her children’s and grandchildren’s home. This all came to light in 2005 when investigated by hb benefit investigation team and there is an overpayment of £34k based on notional capital for 50% of value of property. Is there any way around this overpayment?

Challenge the valuation.
The claimant should be treated as possessing the value of 50% of the property, not 50% of the value of the property

I.E how much would someone pay to own the claimants 50% share of a property that is occupied by the claimant’s ex-wife and children. Normally, not much.

I was going to say the capital is disregarded because the former partner remaining in property is a lone parent, but then I noticed that the ex-wife's 'kids' are grown up! Don't think this provision is transferable to the grandchildren.

But it may well be worth asking the LA a few questions about how they valued your client's share of the capital. If the property is occupied by his former partner and quite alot of his extended family, does he actually have marketable asset - could he force a sale of the whole asset (doesn't sound like it)? - would anyone want to buy his share?

LA's frequently misunderstand the position with jointly-held capital (esp properties). Sure the rules say that a joint owner's share should be valued but the important point is that it should be valued ON ITS OWN TERMS, not just taken as a proportion of the whole. I doubt very much if your client's share in this property has any value.

Jmembery always manages to explain these things much more snappily than me!

How did the LA obtain their valuation of the property? The fact that they are using a straight 50% suggests that they are taking the actual value of the entire property and splitting it in half. The true market valuation may be much lower with sitting tenants.

not only that, if he hasn't contributed for 20+ years, his interest in the home could be much smaller. did the property feature in any divorce settlement?

HB state: market valuation deductions were made in respect of outstanding mortgage amount and disposable costs of 10%. net capital value after these calculated on 50%.

Not sure on detials of divorce settlement but am sure it was split 50 50. ex partner has recently gone to court to apply for a larger share of equity but overpayment is from 2003 to 2005.

In addition, market values are calculated as "the price commanded between a willing buyer and a willing seller". In these circumstances, where might you find a willing buyer...? Nowhere...?

Notwithstanding what other contributors have said, JJ's point is most salient. His beneficial interest will be his contribution to the purchase price in the form of the amount of his contribution to the deposit and the amount of his contribution to the mortgage payments, as a proportion of the current disposable (as opposed to market) value (as indicated by Andy). If he has not made any mortgage payments for 20 years then his beneficial interest may well be very little.

It will be hard to see how it can be 50% unless he and his ex are joint legal owners and there is evidence that they both intended to take the beneficial ownership as joint tenants. Then the court would determine a 50% beneficial interest each in spite of their actual cash contributions. Otherwise they were tenants in common and each one’s beneficial interest will be the percentage proportion of their contributions, i.e. 75%-25%, etc.

LA's and the DWP frequently stumble blindly through this area of property law (I have a similar case with the DWP myself at present - resulting trust and all that). In a case like this it can often be quite useful to get a glimpse of the land registration forms providing, of course, that the land is registered.