Why is it that for IS purposes the applicable amount includes the mortgage interest cost (subject to the 39 weeks rule) but for CTB purposes the mortgage cost is not ?
Since CTB is a means tested benefit why do they ignore housing cost (mortgage cost) for CTB calculation? What is the wisdom behind this discrepancy? Or have I missed something here!

A client of mine did not claim IS mortgage help as he was told by BA that he needed to wait for 39 weeks, (whilst he was claiming JSA, contribution base, and then subsequently IB).

This resulted in the claimant not being able to get full CTB before getting IS due to the 39 weeks waiting period. Of course as soon as IS for mortgage interest was given the client became entitled to 100% CTB. (Note the client has non earned income of about £70, from a lodger, that is greater than his personal allowance (£55.65) hence not getting 100% CTB).
Whilst the client income, was below the IS applicable amount the client was not entitle to IS mortgage interest because of the 39 weeks rule. During the 39 weeks period the client lost entitlement to 100% CTB because the applicable amount for CTB and IS are different.
Is this how it is meant to be or have I missed a trick?
Is there anything one can do?

I think it is correct in terms of the law but I think it is a bit of an anomaly in these "other income" cases. If someone has IS entitlement without the addition of mortgage costs, it is of course immaterial to their CTB when the mortgage costs do get added to their IS.

The only thing I reckon you could do is apply for a Discretionary Housing Payment from the local authority to cover the shortfall which existed for the first 39 weeks.

Are you sure that the CTB has been correctly calculated?

Para 20 of Schedule 4 of the HB regs requires that the local authority disregard; "£4 of the aggregate of any payments made in respect of any one week in respect of the occupation of the dwelling <…>; and a further £9.80, where the aggregate of any such payments is inclusive of an amount for heating". Total maximum possible disregard £13.80 per week !!!

In addition, if any meals are provided (even only one a day, say breakfast?), as part of that £70.00 rental income, then the LA must use the disregards in papa 42 of Schedule 4 requiring:

"where the aggregate of any payments made in respect of any one week in respect of such accommodation provided to such person does not exceed £20.00, 100% of such payments; or where the aggregate of any such payments exceeds £20.00, £20.00 and 50% of the excess over £20.00".

Total Possible disregard, in theory unlimited, though in your case... £45.00 per week (though that would assume all the rental charge was for meals, and that is so unlikely as to be silly, but you get the drift)...

It is worth checking the notification letters issued by the LA, as sometimes these disregards are not programmed into LA computer systems as they perhaps should be...

Well spotted! I hadn't thought about the income calculation. The idea of an LA making a mistake is just such an alien concept to me.....

Thanks to you both. Had already covered the suggested bases.
Already tried the discretionary rout the LA thinks that the claimant is not destitute enough and was quite happy, it seems, to push claimant into poverty.
Unfortunately the rent includes neither any meals nor heating so only the £4 disregard applied (during the 39 weeks wait). Just wanted to air the issue to ensure that I have not missed anything.

Another problem/complication with the same claimant is that his lodger is also on benefit and receives HB and is also on IS. To make matters worst, the lodgers HB is not enough to cover the full £70 chargeable rent and as the result the lodger has been going into arrears. The problem that my client has faced, is that CTB (and now IS) take the full £70 into account even though the client does not receive this amount in practice. In fact since claimant became entitled to IS the same issue has been carried over to his IS claim (though 100% CTB is now obtained due to IS entitlement). I have tried to argue that the £70 is the chargeable rent and not the claimants actual rental income and since IS is an income based means tested benefit they should take into account the actual income as oppose to potential income. I have tried to argue that it is not money that the claimant has failed to apply for or deprived himself of. There is nothing the client can do short of evicting his lodger and then losing not only the money he gets in rent but also all the arrears (I have not yet gone down the route of deductions from the lodgers IS benefit as the arrears are still less than 4 weeks of rent, as the lodger lives with the claimant then the courts route is also not feasible as the lodger is not refusing to pay, he just does not have the money to pay ).
It is a double whammy for the client, losing out form both end.
The client has tolerated and forbore the rental shortfall because he does not wish to lose the lodger as it’ll cause him cash flow problems.

I understand that my client was treated as possessing the income that is owing to him by CTB and now the same thing is happening with his IS claim. But shouldn’t this argument be applicable when the client has failed to apply for such income?

From a common sense view point: if I am owed a million pound but cannot realise/obtain it (because the person who owes me this money does not have it/ is broke) then surely I do not possess the million pound.
This business of notional income/capital is not one of my strongest point.

Any help/pointers/case laws etc on this will be highly appreciated

Money not actually received is not income (see for example Leeves v Chief Adjudication Officer (R(IS)5/99) and also CIS745/1999.)

As for the effect of accepting a lower amount than the contractual rent see CH1076/2002.

Why not get the lodger to apply for a DHP in order to meet the full rent?

I would also ask your LA about whether or not it may be underspending on its budget for DHP's

If there is a current underspend, your case for a DHP is strengthened. The LA may be still thinking that DHP's can only be used in order to prevent exceptional hardship (the old HB Reg 61(3)) when for DHP's all that needs to be shown is that the claimant needs extra help with housing costs (Reg2(1)(b) Discretionary Financial Assistance Regs 2001)

Outside of the CTB scheme, Councils have the discretion to reduce a pesons CTAX liability as they see fit, even to zero (S76 Local Govt Act 2003)

Thanks for reference, got (R(IS)5/99) and CIS745/1999 but struggling to find CH1076/2002 was this a reported case?

I believe the lodger is getting some DHP but still the full chargeable rent is not covered. One thing I shall try is to get the HB to reassess the rent as it was assessed over a year ago.
I think I might have a job on my hand trying to get the LA to cough up money it has already taken off off the client during the 39 weeks period (with almost a year passed).
Many Thanks.

Found CH1076/2002 eventually, very relevant indeed. Thanks again

stainsby
One of the differences between my client rent shortfall and CH1076/2002 is that, every time my client collects rent which is less than the contractual rent he notes on the rent book that the remainder is to be paid later/still owed.
e.g. when he is paid £68 (instead of £70), he notes that £2 is to be paid later or £2 owed to be paid later.
Having read through CIS/745/1999, which is a real beauty (thanks), however, it is clear to me that this difference is irrelevant as the client has not (a) deliberately deprived himself of this money (b) the money is not physically/actually paid to/received by the client and his entitlement to this money does not constitute income.

If my conclusion does not hold water pls. let me know THanks.

I agree with you. You can use CH1076/2002 simply to show that a Commissioner has recognised that it may not be commercially worthwhile taking action for rent arrears in these cases

A totally different tack is to try to get part of the income from boarder disregarded.

DMG para 28250 Types of payment disregarded - Payments of income 1. intended by the claimant, or the person making the payment as a contribution towards certain housing and accommodation costs AND 2. used as a contribution towards any of the costs in DMG 28253 should be disregarded. DMG 28253 then goes on to list the different housing and accommodation costs, including the interest on qualifying loans where those payments are not met in the applicable amount.

CIS/13059/1996 is a cracker of a decision. The client took in a lodger to help with the mortgage expense. The commissioner found in her favour and said that there should be a disregarded from the rental income an amount on the ground that the payments of rent were intended to be used and were used, as contributions towards the amount of eligible interest not met in the IS assessment.

So as long as your client can show he has paid his mortgage/housing costs it should be possible to get some or all of the rental income ignored. This could potentially make your client eligible for IS from the start of the 39 week period if it was wrongly refused at the time.

Good luck

Shona

Shona's argument is a good one

CIS13059/1996 is on rightsnet

http://www.rightsnet.org.uk/pdfs/cis/13059_96.pdf

Thanks, CIS/13059/96 is fascinating.

Unfortunately it seems to me that CIS/13059/96 is only applicable to IS and unless I have missed something it cannot be used for CTB purposes; I could not find the equivalent of Sch(9)para(30) in the HB Sch(4) (happy to be proven wrong). In my clients case the LA took the rental income into account (subject to Sch(4) para(20a) i.e. -£4 deduction) without disallowing mortgage costs and therefore gave client very little CTB during the 39 weeks that the client was not entitled to IS.

Unless I am missing something I am not sure how CIS/13059/96 could be used to entitle client to IS during the 39 weeks period as you have suggested.
In my clients case I don’t think it applies, as the client was getting JSA and then IB during the 39 weeks? Or am I missing something? Not seeing the wood for the tree may be!
I can see circumstance under which (e.g. when claimant is entitled to DP/SDP/EDP etc.) by offsetting the rental income against mortgage the claimant become entitled to IS even during the 39 weeks waiting period but this does not apply to my client.

A more interesting thought that has occurred to me is whether CIS/13059/96- DMG 28250 and 28253 (3) …… can be used to offset /pay rental income against/towards payments for an endowment policy (or even a pension policy) to cover the qualifying loan? (After all an endowments purpose is to pay the mortgage capital albeit in one go at the end of its term). Has this been tested?

It seems that DMG 28250 and 28253 (4.2) allow for rental income to be used to pay for building insurance and having it offset against IS applicable amount.

No wonder every year billions of entitlement goes unclaimed or in some cases claimed but wrongfully not paid.

As your ciients IB or JSA exceeded anyway, even if all of rental income disregarded it won't help for the first 39 weeks.

If he is now entitled to IS because mortgage interest included in the calculation, he could be entitled to get some of the income from the lodger disregarded under this provision because he intended it to cover insurance, capital or endowment repayments etc. Even now, he could be entitled to more IS than he is presently receiving.

Shona

Thanks .
Reg. endowment payment, could this be done with client's private pension payment. As the client had used his private pension as the vehicle to pay for the mortgage capital at the end of its term (i.e. 25% of the pension pot can be taken tax free and used to pay off mortgage). Or if the client now takes out a new endowment, could payment towards this be qualified payment(given that it’ll be a new policy)

I haven't got a copy but I believe that CIS/3911/98 covered a similar situation - and the decision was that a pension payment could not meet the 'intended' part of the criteria.

Have a good Christmas & New Year

Shona