My client gladly 'sold' former property to a woman 'X' who has since become her current landlady. It was agreed that X would discharge the outstanding mortgage of £25K. No money was paid to my client.

Property had been in state of disrepair and needed major works. Client long term depressed (very) and had been struggling to maintain mortgage and it was a sigh of relief when X agreed to 'take it off her hands'. She still had decent credit rating and thought she could make a fresh start once her depressive state improved.

She is now a tenant of X (not in the former property). LA now saying she's deprived herself of capital. They've had property valued at £50K which is what it's worth now it's been refurb'd. (I know £50K sounds unbelievable for a terraced proprty in today's climate but it's probably right). There is no way we can prove what it was worth at the time of transfer but then again neither can LA.

Client currently on IB but she has no HB and now X has inferred she'll issue possession proceedings on grounds of rent arrears. I can only think of getting X to confirm what she and her contractors thought it was worth but it's very unlikely she would agree to help. After all private landlords are not famous for their altruism. Client doen't want to rock the boat with her at present and so doesn't want me to write.
I can't see any way of getting a true valuation as at the time of transfer - what can I do apart from an expedited appeal and hope for the best??? This situation is really exacerbating my client's mental health.

Is she in the property that X bought or a different property that X owns.
Can you get a completion statement from the conveyancing solicitors. This should show your client made no financial gain. Why did your client sell the property so cheaply and did she sell it through an estate agent.

Stephen she's in a diff property. Sounds illogical but she sold it for the 'cost' of the outstanding mortgage. Been depressed for years and been struggling to make payments. just decided to let this woman take it off her hands to alleviate stress and give her a 'fresh start'. She'd already paid to get repair work done but cowboys had charged a fortune for a bodged job and she couldn't bear to live there in the damp and cold. She got to the stage where she was only too pleased to be rid of it.

Andy, they have done the calcs correctly based on a wrong valuation. They've deducted the mortgage plus the 10% but it still leaves her with apprx £25k notional.
We completed the proforma for the LA but it was difficult as by then the work had been carried out. I'll try to VOA but i can't see how they can give a historical valuation when they'd have no idea of the value prior to the refurb.
Benefits were suspended pending further investigations and only just had decision which is obviously now appealed. I'll have to keep plodding on with the appeal. I'll ask the LA to do an expedited sub to TAS (which means we might get a hearing within 6 months).
Thanks for your help

In order for it to be deprivation, the LA has got to show (and I think the onus is on the LA) that the main purpose behind what your client did was the obtaining of HB. Seems like there are all sorts of other circumstances which contributed to her actions. Has she appealed against LA decision?

The other point is that the LA cannot say that your client has deprived herself of what the property is worth now, they have to go back to what it would have realised at the time she disposed of it. They should also subtract the amount of the outstanding mortgage, because your client would have been left with that had she not taken the actions she did, and then there is the 10% disregard for the expenses of sale.

When LA's need to value a property for HB purposes they are supposed to go to the the Valuation Office Agency. I could be wrong, but I am sure that VOA can do historical valuations and should take account of the state of repair of the property. There is a pro-forma that LA's are supposed to get the claimant to complete in cases where there is ownership of a property which may count as capital which gives the relevant information.

This may of course still leave your client not entitled but there do seem to be some grounds for arguing that it is not deprivation at all.

The decision makers have to base their decision on fact, what the value might or might not have been is irrelevant, the fact of the matter was your client sold the property for the value of the mortgage and made no financial gain. It is wholly understandable why your client sold the property, ie dodgy state of repair, the living conditions and the state of her health. I can't see how she has notional capital because there's been no deprevation. She has to live somewhere, so why not in rented accommodation? Doesn't matter who the landlord is so long as they have a commercial agreement.
As for getting a quick hearing, I would send a submission into TAS and ask them to list a Tribunal bearing in mind your client's particular circumstances.