Hi,

I've been scratching my head about this and have reached a mental block, please help!

I have a client who has recently eperated from her partner and father of her 2 children. They were living in house where they owned 50% of the equity and the housing Association rented the other 50%. She is currently getting Housing Benefit to pay the rent. The bit of the house that was purchased was paid for with a loan from the ex-partner's mother who now wants her money back. This means the client would have to sell the share in the house.

she wants to move asap, would she be able to claim HB on a new home whilst she is trying to sell the 50% equity in the current one? and what problems do you envisage when the equity has been sold in terms of being accused of depriving yourself of capital.

Thanks

Matt Finch

The value of the former home can be ignored for s months (or longer if it is reasonable) from the date the claimant first took steps to dispose of it. With regard to the equity. It first has to be established whether the money put up by the mother was actually an investment in the property or a loan to the claimant in person. If the former then the claimant holds the property in trust for the mother and the money is not the claimant’s upon sale. So the issue of deprivation does not arise.

However, if the money was a personal loan to the claimant then the equity in the property is the claimant’s. That will be calculated as her capital (or part of it will be if her ex-partner also has a beneficial interest). The issue of deprivation and notional capital will then turn on: 1) is the loan immediately and legally due to be repaid? If so then the notional capital rules will not bite. 2) if no to question one, then was there a significant operative purpose in repaying the loan to entitle the claimant to benefit?

Furthermore, if the mother sues for the debt and the court finds for her then the notional capital rules should not bite (as in question one, above) and if she repays while being threatened with court action or when papers are first served then the rules should not bite either as avoiding court proceedings and/or any court costs would, in my view, be a reasonable defence.

For "s months" read 6 months.