Reply To: 2nd property capital value – odd request!

#163648
d-stainsby
Participant

Just because something is unusual does not make it an abuse.

I have also been around long enough to know that HB ( and IS housing payments) have been used to fund some very righ people's housing expenditure.  (In Secretary of State v Julien (reported as R(IS)13/92), the Court of Appeal held that the interest (at14.9%) on a mortgage of £630000 taken out in 1989 must be met by  IS as housing costs.)

Mr Julien won his case, but it was such an "outrageous" one that it arguably led to successive changes in legislation that we see today

It is also interesting to note that Mr Sier in the famous Cambridge CC v Sier case was a merchant banker who had chosen to rent accommodation in London SW1 and seek to  exercise his right to buy in Cambridge. (and get HB on both in the meantime)

Mr Sier came unstuck but Mr Julien did not.

I have represented those with shared ownership tenancies who can no longer keep up their payments and their only option has been to move out,  sub let, and then rent somewhere else and claim HB.

This has been feasible because the lack of equity in the shared ownership property meant that there is nothing complicating the subsequent HB calculation, and the rent obtained from renting out the shared ownership property just covers the outgoings so there is no inccome obtained from it.

In the case of the hypothetical £5m penthouse, I dont think you need to look at the take advantage angle because there are a number of Commissioners decisions where it has been held that take advantage does not mean "make the most of opportunities that it presents”  (see for example CH/0039/2007), but means something more akin to abuse

The person with the £5m penthouse would presumably have a mortgage to pay whilst waiting for any sale to go through, so unless they rent it out they will continue to incurr that expediture.  (On the other hand it might be owned outright)

I would be asking whether they are renting it out , what the mortgage payments are, and for evidence to confirm that they are taking steps to sell the property.

You then need to look at whether or not the £5m property is to be disregarded or not and if so how you assess the income if any that is generated by the disregarded property (assuming there is enough equity to be disregarded)