My colleague asked me to post regarding this case.

Client moved into a shared ownership property - part rent, part buy. A year later while still working she increased her share of the property.

Client took out a new mortgage which covered the original mortgage (£45'000), the new cost of the increased owned share of the property(£90'000), and money towards household repairs.

Client was not getting HB at the time.

Client has now claimed IS in Jan. 2008. They have agreed MI on the original loan, and a portion of the money used to repair the property (which client accepts as fair).

They have refused ISMI on the mortgage used to increase the owned share of the property.

We have looked at CPAG and believe it should be covered by page 802, where loans that qualify include those "taken out to buy an additional interest in the home". We've also checked out the commissioner's decisions R(IS) 11/94 and R(IS) 7/93.

It seems pretty clear to us that this would be analogous - but are there any cases actually involving shared ownership ? And does anyone know how other DWP offices are dealing with this ?

If the client has to appeal she faces repossession before the case has even been heard, and we want to look into everything possible at review stage.

Victoria J

I'm not sure that R(IS) 11/94 is analagous.

R(IS) 11/94 was looking at later costs, "...makes no provision for the building of a home." but not for acquiring a later interest.

R(IS) 7/93 where the issue was acquiring a freehold reversion is a better base.

I can't understand though what the department's basis for their decision is, all the interest in the property was acquired before benefit was claimed and was for the appropriate purpose. Subject to the 13 / 39 weeks rules, it would seem straightforward.

Is the client getting HB for the rental part of the property? I assume that HB is not being paid for the previous portion of the property, which was rented but is now owned, which would be the offsetting principle if they were correct?

ps whil trawling our CD-Rom, which doesn't have any shared ownership CDs, I came across a quote from R(IS)4/97 which generates a feeling of deja vu:

" The result was that by the beginning of the 1990's their borrowing had doubled, and instead of the secure retirement to which they should have been entitled they faced pressure from their mortgage lender and a debt now mounting out of control. Like many ordinary hardworking but financially inexperienced people who got caught up in the wave of irresponsible lending caused by the "financial deregulation" of the 1980's they, and the rest of the community via income support, have been left to pay a heavy price"

R(IS) 7/93 indeed seems better. But R(IS) 11/94 (and I'm assuming the other's quoted by CPAG for other similar but not identical cases - we hadn't looked them all up yet) does accept that you can acquire interest in more than one "bite" - the different cases seem to add up to a fairly clear principle.

I believe she now owns the home outright so no HB is payable, and she was not receiving HB when the 2nd mortgage was taken out so it can't be restricted to the rent being paid (and in any case this isn't what has been done).

We don't yet have written reasons, so we're waiting for those. Unfortunately while the client lives in our area she's one of the odd corners of the local authority which is dealt with by a different part of the benefit agency and we have none of our normal contacts there.

It's so frustrating when you get these cases where everything almost says the client's right. And the depressing other side to the number of almost analogous commissioners decisions (regarding different forms of increasing interest in the home) is that all of those had to go to the commissioners.

Thanks for the response.

The quote is pretty depressing isn't it. Though with all this talk of credit crunch I'm not seeing that many mortgage problems now - just lots and lots of redundancies, and bankrupt employers. And the same old people who bought their council houses and AREN'T leaseholders, and will forever struggle to keep the homes maintained adequately on benefit.

Victoria J

R(IS) 7/93 is not directly to the point. It relates to acquiring a different interest in land on top of the one you already have. In that case, the claimant originally had been a leaseholder, but subsequently bought the freehold. The commissioner confirmed that the loans taken out to acquire both interests were eligible.

I think that R(IS) 6/94 is much closer to your case, as the interest being acquired was of the same kind as that already owned. The claimant and her husband had originally owned their house as joint tenants. That tenancy was severed by operation of law when he became bankrupt, so they then held the property as tenants in common in equal shares and his share vested in his trustee in bankruptcy.

The claimant raised a mortgage to buy her husband's share of the property from the trustee in bankruptcy. The Commissioner held that this mortgage was eligible as she was acquiring a further interest in the property, even though it was of the same sort- an undivided share of a freehold - that she already had.

Your client previously owned her home as tenants in common with the landlord and she bought the landlord out. I can't see any difference from R(IS) 6/94.

It's perfectly simple to explain why so many cases go to the commissioners - look at the dates on these cases. The rules hadn't been around long enough for people to know how to apply them. The decisions under appeal would have been made, probably, well over a year before the date of the CD. And DMs know very little about basic land law or most ares of law outside their very own little corner (and i make no comment on how much they know about that).

>R(IS) 7/93 is not directly to the point.

We understand that - and would certainly be relying on R(IS) 6/94, but the other cases including R(IS) 7/93 given by CPAG at that section do all show the wider principle that the law stating that the loan must be taken out to "acquire an interest" does not require this to be a single event, interest can be acquired in multiple steps.

>Your client previously owned her home as tenants in common with the landlord and she bought the landlord out. I can't see any difference from R(IS) 6/94.

I like that. It's much clearer than any way we had managed to express it.

>It's perfectly simple to explain why so many cases go to the commissioners - look at the dates on these cases.

I can understand that, it's just knowing that every commissioners decision on this issue must have caused such hardship to the claimants concerned. I read them and wonder if the mortgage company waited, or the claimant was able to raise the money elsewhere...

Plus we just get can't get our head round the decision in our client's case. It seems so clear to us, and yet the DWP don't seem to see it at all.

(Which is particularly odd given the acceptance of £12000 taken out to repair what is a relatively new property with no evidence of serious disrepair, and which was not for disability adaptations. If they'd turned that down we probably wouldn't even have been arguing).

Thanks for the help,

Victoria J

I recently came across a case of a man who had appealed against failing his PCA and put in the usual claim for reduced IS in the meantime and they only allowed it from the date of his appeal because nothing in regualtion 19 applied to his late claim to allow backdating, becsue someone was too lazy even to look at the current wording of para 25 of Sch 1B of the IS regs...

Grrrr. As people say. And it had to go to appeal to get itself sorted. So if they can bugger a simple little thing like that up what chance does a case like yours stand?