I'm afraid I don't have time to do the research, but since it's been a few days since your post, here are some initial thoughts (which might not be correct).
If, as you suggest, the capital value of the house that isn't being occupied as the home can be disregarded, then continued receipt of IS deals with the capital issue for HB/CTB.
HB. So long as they are living in the home for which they are liable (rented) and the client receives IS, cannot think of any reason why HB would not be payable. I think I would be checking the liability rules; especially those that consider circumstances where someon is treated as, or as not, liable.
CTB. I'm pretty sure CTB can only be paid on one property at a time. If this is the case, then perhaps consider CT liability/discount issues on the owned property.
Hope this helps, or least gives you a starting point.
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