Hello all

Claimant has moved into hostel and wants to claim HB. Hwoever, just discovered they own a property that they are renting out. Unsure of equity or rental income at this stage. There are no plans to sell the property.

Would this house ownership disqualify them from claiming HB?

If not, does the equity count as capital (what proofs would be needed?), and how is the rental income treated for HB purposes?

Thanks all

It is likely to be a capital asset unless it falls to be disregarded under various provisions in the regulations. One of these would have been if he was taking steps to dispose of the property. Another would be if it was occupied by a partner or relative of the claimant who is over 60; or former partner if that person is now a lone parent. There are more, so you really need to know who is actually living there and what all the circumstances are. If he has tenants in there and he is not taking steps to either dispose of the property or to get them out so he can live there, it does not sound like it can be disregarded. In which case the amount of capital is the value of the property less encumberances such as outstanding mortgage or legal charges. The rent collected is also capital.

The first thing you need to find out is whether your client has an immediate interest in the property or a reversionary interest in it.

For example, if when he bought the property there was an existing tenant with a tenancy for life then he may only have a future, or reversionary, interest and the property may fall to be disregarded under schedule 5, paragraph 6.

However, there may be a need for advice on land law. The tenant may have an interest in the land (if the land is registered) or an equitable right (if unregistered) which protects him. But in certain situations these rights or interests may be overeached by a purchaser and thus 'swept' off the land.

The tenant needs legal advice asap.

By purchaser I mean, primarily, your client when he bought the property, although rights against all future purchasers need checking also.

Seems it could get quite complicated! For the moment we need to get as much info as possible about the property & tenants and take it from there.
Thanks to everyone for your help.