Can a gift of capital made by a relative be disregarded under Sch 10 if it is intended for the sole purpose of home purchase?

I will be seeing a client tomorrow who is believed to be getting UC. 

She is exploring the possibility of purchasing her home via her retained ‘right to buy’. Her son has indicated that he is willing to gift her £18000.00 to allow her to do this.  I have been told that she gets UC and CTR.

I can see UC Regs, Sch 10 para 13 that under the ‘amounts earmarked for special purposes’ a grant intended for the purchase of a home can be disregarded.

Does the meaning of the word ‘grant’ also apply to gifts from relatives?

I would be grateful for any guidance on this matter as it is not one I have come across before.

Interesting question. In ordinary use, you would not think of a relative giving you money as a “grant” but how do we then define what differentiates a grant and a familial gift?

Reg 2, UC Regs is a bit curious because it tells us that ““grant” has the meaning in regulation 68” but reg 68 is only concerned with student income.

All things being equal, your client would want the money to be paid directly to the conveyancer shortly before the purchase so that it never becomes their capital at all.

Probably Elliot’s reply as to what to actually do is correct- but you might want to double check with client’s sol who is doing the conveyancing that acting in that way won’t accidentally give the son an interest in the house the mother does not want him to have….

Separately, I wonder whether there is a more general principle that the mother will not hold the money beneficially in any event - it would be a Quistclose trust perhaps as it is intended for that purpose? I am not sure whether para 13 of Schedule is intended to close down scope of such arguments but I don’t think it is.

Rightsnet have done a lovely job of summarising Judge Wikeley’s summary of how this works in VMcC v Secretary of State for Work and Pensions (IS) [2018] UKUT 63 (AAC) <a>here</a>:

Judge Wikeley goes on to provide guidance on how to approach cases where a claimant asserts that funds in their bank account are not in legal terms their own because they derive from a transferor and are intended for a particular purpose (a form of resulting trust based on Barclays Bank v Quistclose Investments Ltd [1970] AC 567). Judge Wikeley goes on to summarise the test for establishing a Quistclose-type trust as requiring -

  -the transfer of funds on terms, typically for a stated purpose, which does not leave them at the free disposal of the transferee;
  -an intention to create what is, viewed objectively, a trust;
  -creation of a trust by a person’s words or conduct, not their innermost thoughts;
  -where such a trust is created, the beneficial interest in the property to remain in the transferor unless and until the purposes for which it has been transferred have been fulfilled;
  -where such a trust is not created, the money becoming the property of the transferee, who is free to apply it as they choose.

The authors of Sweet & Maxwell certainly to agree with you on reg 68 ‘grant’ definition not seeming appropriate, Elliot.

But they also map the provision to eg Sch para 37(a) Income Support Regs (also applicable in legacy JSA/ESA equivalents), though point out there is no limitation on the source of the grant so far as UC is concerned.

“Any grant made to the claimant in accordance with a scheme under section 129 of the Housing Act 1988 or section 66 of the Housing (Scotland) Act 1988 (schemes for payments to assist local housing authorities and local authority tenants to obtain other accommodation) which is to be used—
(a)to purchase premises intended for occupation as the claimant’s home [...]”

On balance, I think the better view is that the more technical ‘grant’ meaning applies given the genesis of the provision.

That said, I’m struggling to think of any particular statutory or extra-statutory grants that would exist. So what would removing that restriction on the source of funds be intended to achieve if not expanding eligibility in some way (a change in statutory wording generally being assumed to have some purpose in statutory interpretation)? Possibly just simplification of the wording of the law as with other aspects of UC.

Thank you to those who have responded. 

I spoke to my client today, and she states that she and her daughter who is living with her are intending to obtain a joint mortgage.

It appears that her son has now decided to make the gift of the money to his sister who is in full time work so the matter of its impact on my client’s means-tested benefit no longer appears relevant.

Thank you Martin for highlighting the issue of the beneficial interest. I have passed on your comments to her as this point may be an issue that she and her children should understand and be in agreement about before they make a purchase.

I have also urged her to consider whether she and her daughter will hold the property as joint tenants or tenants in common and to consider scenarios such as what would happen if one of the owners wanted to sell or what would happen in the event of a death.

In the absence of a relevant statutory definition, words in legislation are given their ordinary and natural meaning, and that often seems to mean turning to the Oxford English Dictionary, or a similar authority. The relevant definition of “grant” in my (rather old) OED is: “a gift or assignment of money, etc., out of a fund”. It’s the last four words which are crucial, I think. In other words, a grant is a type of gift; a gift isn’t a type of grant.