Been having a discussion about new Government scheme just announced. Where you buy half the house and rent the other half. Just wondered if anyone knows what the implications are for potentially claiming Housing Benefit and Housing Costs at the same time. Is this possible? I know the scheme already exists in a more limited form. Can anyone enlighten me? CPAG isn't clear.

This "new" scheme sounds like a classic co-ownership scheme to me. The rent elements could be met by HB and I can see no reason in principle why the other housing costs should not be met by IS/JSA/PC if there was entitlement to those benefits.

Sorry meant to say shared ownership not co-ownership, although I think it's the same thing.

Shared ownership is quite common amongst housing associations - and getting HB for the rent element and income support/jsa/pension credit housing costs for the mortgage interest (and service charges in some cases) is not usually a problem. If a buyer is getting income support/jsa/pension credit (GC), then they will automatically be entitled to full HB.

However, there is a potential problem, albeit one which I've not recently come across in practice: Buyer has an income (e.g. Incapacity Benefit & pension) which means that, even with housing costs added to their income support applicable amount, they are not entitled to income support. And, because of their income, they will only be entitled to a small amount of HB. Once they've paid their mortgage interest and rent, they are left with a disposable income way below their basic personal allowance. This is because mortgage interest and rent are treated differently and covered by two distinct benefits - yet in reality they are both "housing costs".

Claimants need to be aware of this potential shortfall, which will admittedly only arise in a small number of cases.

Does anyone know how LHAs and shared ownership works together?

LHA's should be calculated exactly the same as way as 'normal' HB...

This means that the 75%, 50%, 25% or whatever equity share has, should be treated as 100% of the rental liability, and HB assessed and paid in accordance with the LHA rules that apply to other 'non-equity share' renters... In theory, this will mean that some claimant's will gain, substantially...

Of course, as was pointed out above, some will lose (?again possibly substantially), on Mortgage Interest relief....

Of course call me a cynic on LHA's, but it will only take a slight amendment to the LHA regs to say, for instance; "the appropriate authority will calculate and pay the amount of the LHA, or the amount of the contractual rent, whichever is the lowest"... I can see that amendment coming, as regardless of the point about equity sharers, some claimants’ have gained over £100.00 pw through the LHA… Once LHA's are rolled out nationally, I can see Ministers inserting a clause in the regs to that effect when it becomes known the amount of HB 'overspend' there is as a result of the 'gainers' from the LHA system... Of course, as always, I suspect the 'losers' will be ignored... The amendment to the regs restricting all single person’s rent to the SRR was brought in before May 1997… It was only because of a change in government that it was never implemented, (though of course, the new government did abolish One Parent Benefit)!!!

But maybe I'm just an ole soak...

"This means that the 75%, 50%, 25% or whatever equity share has, should be treated as 100% of the rental liability, and HB assessed and paid in accordance with the LHA rules that apply to other 'non-equity share' renters... In theory, this will mean that some claimant's will gain, substantially..."

I'm not sure tjhat I follow that. I'd assumed that, for example where there is a 75% rent / 25% equity split, that the LHA would be 75% of the equivalent full level for the property. Are you saying that the tenant/owner will get 100% of the LHA? (Plus the mortgage support in IS/JSA/PC?)

Thats exactly what I am saying...

In the LHA regs, there does not appear to be provision to split a rental according to any co-ownership...

Reg 11A (8) seems clear in saying that HB is to be paid according to the LHA amounts... There is no provision that I am currently aware of that says anything else... Of course, I am talking from theory, not practical experience as I have yet to work in a Pathfinder area, though as they are increasing hummmmmm....

In many pathfinder authorities there are many instances of HB being paid substantially above contractual rent, the highest I have heard of is somewhere near £200.00 pw... (Of course, I have not heard of any stories regarding massive losers in the LHA system, but you can bet they are there!)...

There is therefore no reason why, if a person holds 50% equity, and a 50% rental (or even 75% equity, and a 25% rental), that max HB (according to the LHA scales), will be reduced... As far as I can see the regs don't make provision for any reduction along those lines... So yes, 100% of the LHA should be payable...