HCE for part owner

Client owns 50% share of the house he occupies. Mother owns the other 50% but is not resident.

Client has claimed UC and has housing costs element of £50 per month for the rent he pays to his mother, however the inclusion of housing costs is making him worse off as the lower work allowance is applied to his partner’s earnings.

Regulation 25 para 3 (a) i of the Universal Credit Regulations 2013 holds that the housing costs element is payable where a person has a liability to make payments on the dwelling that is “on a commercial basis”. 

Is it arguable that housing costs element should not be included as the tenancy is not a commercial one? Mother would not evict client if he didn’t pay rent, for starters.

As well as the requirement that the payments are on a commercial basis, they need to be of a type listed in para 2 of UC Schedule 1.  Everything in that paragraph refers to payments that are made as a condition of the right to occupy the dwelling - if you don’t pay, you can get evicted.

I know there are differences between Scottish property law and the English/Welsh regime, and I don’t know very much about it, but I’d be surprised if the arrangement they have is one that requires her permission to allow him to live in the accommodation.  I’d assume he has that right as a joint owner.  What he is doing, I think, is compensating her for staying away.  She is giving up or not exercising her own right to occupy in exchange for some money.  That is not a type of payment that Schedule 1.2 covers, so I think he can legitimately argue that the housing element should be stopped and indeed should never have been awarded.

Whether it’s possible to get this done retrospectively will depend whether DWP had all the facts and made an error, or whether DWP was ignorant of the full facts and assessed the case correctly on the basis of the facts as presented.  But at the very least a superseding decision from now on should be possible.

I’d not thought of it that way but it makes absolute sense. Thanks so much.

As per Peter, but I think additionally that if there is a relevant liability here it is excluded by para 7, sch 2 UC Regs. He is making payments to compensate the other beneficiary of a trust (viz. the co-ownership with his mum) in relation to his use of trust property for his own purposes.

Another thread to the argument - thank you. Though it does mean that once this is accepted, there would be no way back to getting the HCE should earnings end and the work allowance is a non-issue.

He is either entitled to the HCE or he isn’t. In this case he isn’t. It shouldn’t really have gotten much further than the fact that he owns the property.

I agree. Client says DWP is aware he part owns the house with his mother so I was surprised to see HCE included in his first payment.

In the HB Regs, a shared ownership tenancy in relation to Scotland is defined as one where the tenant is a “joint owner” together with the landlord.

Reg. 12(2)(a) of the HB Regs implies that HB can be claimed for such a tenancy.

Firstly, for Peter’s comment above, does this not imply that it is possible to pay “rent” in Scotland to a joint owner, and it isn’t just compensation to the other owner? (I know we have discussed this before!)

Secondly, on Elliot’s comment, HB also has the rule about payments to a trust, yet joint owners in Scotland seem to be fine, as above. Could it be that there isn’t automatically a trust of land in Scotland like there is in England and Wales?

Well perhaps but if we are doing Scots law I shall have to bow out!

Thanks for your thoughts. Perhaps the safest bet is back to the non-commercial tenancy’ argument? Guidance states that “there must be a liability to make payments which is on a commercial basis and a claimant must have the actual liability or be treated as having it. A liability to make payments imposes legally enforceable conditions on the parties to the agreement. If one party breaks the agreement, the other party has the right to go to court to seek redress. An agreement may not be on a commercial basis where it includes terms which are not legally enforceable or which the parties do not intend to be legally enforceable.”