2nd Property

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    Quick question as not come across this before in my authority:-

    Claimant has 2nd property which would take him over capital limit. However, property has inhibition order on it which means if he sells all proceeds are to be used to pay off non-mortagage related debts. Dispute in office whether to include property as capital or not in view of inhibition order .

    I cannot see under which category the property can be disregarded but would welcome other opinions before making assessment.


    47. Calculation of capital in the United Kingdom

    Capital which a claimant possesses in the United Kingdom shall be calculated—
    (a) except in a case to which sub-paragraph (b) applies, at its current market or surrender value less—
    (i) where there would be expenses attributable to sale, 10 per cent.; and
    (ii) the amount of any encumbrance secured on it;

    Dictionary states ” encumbrance” is a general term for any claim or lien on a parcel of real property. In your case, there appears to be an enforceable claim so i would disregard.


    Okay thanks for that. I had initially not considered this as the debts are for unsecured loans but I now realise that the lenders have to raise the inhibition orders in an attempt to get their money back.


    Something important has just occurred to me about this case. Does your claimant have tenants paying rent for the property? If so, it is important to be clear about exactly what mechanism you are applying here. As Peter D says, it appears to be fair enough to regard the debts as an incumbrance secured on the property and deduct them. What you are doing is valuing the capital asset net of those debts, and arriving at very little or nothing. But you are still in theory taking it into account as capital – it just isn’t worth a lot.

    This is important because any rent income paid by tenants is disregarded when the value of the asset is taken into account – whereas if you were disregarding the capital value, the income from tenants would count as income after allowing for any mortgage payents and water rates. Like a two-door cupboard in a Tom and Jerry cartoon, if the income door is shut the capital door is open, and if the capital door is shut the income door is open. The capital side of the cupboard might not have anything in it when you open the door, but the income door still has to stay shut.


    Tom and Jerry cartoons in Housing Benefit? But Tom and Jerry are always going round and round in circles, without ever getting a result. Nothing is simple and there is often a larger force with a big stick.

    Yes I see what you mean ….


    Yes I see what you mean as well…

    .. but property is not rented out, which maybe leaves us with the question why is not rented out if that is a way of generating income from it??

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