Reply To: Disregard of capital to buy new home

nick dearnley

The disregard applies if the money is intended to be used to purchase a new property.  That will include part-rent/part-buy properties.  In a similar way to looking at intention to return in temporary absence cases, I think you need to know whether there is a realistic and realisable intention to buy a property.  I don't think they need to have agreed a purchase or put down a deposit, but they will need to show you that they are looking for a place that they could buy. 

For example, I am dealing with a case where the disregard was applied and ran for 55 weeks.  The clmt now tells me that she has not looked at all since April last year because a mortgage adviser told her the limits of what she could borrow and she can't find a place in that range.  So she has not taken any steps since then, and I decided that the money was no longer set aside for a purchase.  I also found several properties nearby that looked to be at least potential candidates.  She's appealling…..

I would want to know what steps she has taken to find a place, when, and so on. If, at one end of the scale, she just wanders past the estate agents on her way to work that won't be enough, but if, at the other end of the scale, she can show mortgage quotes and offers made (even if rejected by vendors) that would satisfy me.  It depends on the individual case.  The object of the disregard is to give some time between the original sale and the purchase of the new place, because it takes a while to find a house, but doing nothing isn't an option.

The standard disregard is 26 weeks, so anything longer than that needs to be explained as part of the reasonableness test for the extension.