Reply To: Is this a tenancy?

#9768
petedavies
Participant

I think, in general terms, your landlord is letting the property for an amount, [i:0183cbd629]x[/i:0183cbd629] which can be divided into two parts – [i:0183cbd629]y[/i:0183cbd629], the amount charged for use and occupation (rent) and [i:0183cbd629]z[/i:0183cbd629], which goes towards the ultimate purchase price.

If this is the case then I think that [i:0183cbd629]y[/i:0183cbd629] will attract HB but [i:0183cbd629]z [/i:0183cbd629]will not.

If I am correct here you have a further problem – what is z treated as? It may be capital, but if the tenant does not have the right to have the money back at the end of the agreement if no purchase is made then it is arguable it is not. I expect that there will not be a right of refund – this may explain the claim that 100% of the payments could be credited towards the purchase price.

It may also be the case that the agreement will fall to be considered as a conditional sale agreement but I suspect not.

You really need to see the agreement between the LL and the tenant.
You should also consider whether or not the LL would have grounds for possession for rent arrears if a tenant were to default on [i:0183cbd629]z[/i:0183cbd629] only.

Still, time to duck back before I get my head shot off!