Good afternoon,

I have a client who has moved into rented accomodation. She owns a property with her ex husband. The property is valued at approx £130K and there is no mortgage outstanding. Both her and her ex husbands name are on the deeds of the property.

Client has advised me that her and ex husband have a legal agreement (I've not seen the agreement) stating that the property could not be sold whilst one of them was still remaining in the property.

Despite the legal agreement, would I be correct in assuming that the client would be refused HB on the basis that half the value of the other property would be taken into account in the HB calculation or are there any regs that say it could be disregarded as she has no access to these funds?

Cheers

John

Mon 22-Sep-08 01:34 PM by stainsby

It is not half the value of the property with vacant possession, but the value of the half share that is taken into account.

I dont think there is likely to be an active market in such investments so it could be practically worthless. There have been a number of Commissioners decisions that will support you

The right to apply to the courts for a property adjustment order is not a capital asset (R(IS)1/03.)

For how shares in jointly held property should be valued see R(JSA)1/02 and CH/1953/2003

Thanks for your prompt response and the pointers to the various decisions.

It turns out that the HB department have advised her not to bother applying for HB as she would be treated as having more than £16K in capital. It has only been referred to me as the tenant is really struggling to pay her rent as she only has a net income of £148 per week and no savings to fall back on.

Regards

John

No doubt you will help her with an application for backdating on account of the HB depts misleading advice

Absolutely!

I’ve posted on this issue many times and I still get irritated by HB’s simplistic approach to this and the unfounded assumptions they make. Send your client to see a solicitor straight away as it has to be determined whether, a) she has a beneficial (as opposed to a merely legal) interest in the home, and, b) if so, just what that interest is.

It should not be automatically assumed that the interests are 50% each as a matter of course. It has to be determined whether the parties are joint tenants in equity or tenants in common. These issues are complicated, involving many various land/equity/trust law principles and she needs to see a solicitor.

The agreement you mention. Is he still in the property? If so the agreement could be a court order under the Family Law Act granting him a right of residence. That might reduce the market value further.

Once her beneficial interest has been determined then the principles of valuation in the case law Stainsby refers to apply.

I would want to know when and in what circumstances the agreement was entered into and the relationship with the need to claim MTBs, in case notional capital reared its ugly head.

I dont think notional capital would rear its ugly head if the amount of actual capital is negligible

Tue 23-Sep-08 01:04 PM by Tony Bowman

But if the actual capital is negligable because of a deprivation (ie the agreement was entered into to reduce the capital value of the assett) then a notional capital decision would be based on a different capital calculation.

I'm sure it's highly unlikely, but I like Ariadne's depth of thought...!!

Agreement or no agreement, its the value of the share that is relevant. Its not going to be that great with a sitting occupant who is a co-owner who is unwilling to sell up