2nd property – joint ownership

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  • #31673
    Inga Mycroft
    Participant

    Hello

    Please can I have help with the following scenario.
    Claimant has a 25% share in a second property – it cannot be disregarded so we have had a valulation done. VOA has come back and said that the true market value if the property is £140,00 and that the deemed share after encumbrances is £18,000.
    We then has to take off 10% for selling costs but there is dispute in the office as to what the 10% figure should be. Is it 10% of the £140,000 (ie £14,000 so no tariff income applies) or 10% of £18,000 (ie £1,800 which would out them above the capital limit).

    many thanks

    Inga

    #88583
    peterdelamothe
    Keymaster
    #88584
    Anonymous
    Guest

    In practice you would deduct 10% before deducting the mortgage. Unfortunately when valuing shares the DV tends to take any encumbrances into account, but I’m not sure if they consider selling costs in their calculation. I would get a full breakdown of their calculation and see if they have factored in selling costs. If not, I would attempt to add your claimant’s share of the mortgage back onto the £18,000, then deduct 10%, then deduct the mortgage again.

    #88585
    Inga Mycroft
    Participant

    Thank you for your replies.
    On the LA2 that the VOA complete I can’t see the point of them valuing the deemed share less emcumbrances if we are just going to add them back on so we can work out 10%. Seems very odd to me. But the regs don’t seem to support only taking 10% of the lower amount (hence my original post). Anyway I’ll drop the DWP an email to see if they can give me any further clarification….

    thanks again

    #88586
    peterdelamothe
    Keymaster

    Why on earth would you want to do that????

    Peter B set out the position very clearly in an earlier thread I refered to:

    “Definitely 10% of the full value, before you deduct the mortgage. Your case is a perfect demonstration of why it matters.

    HB Reg 47 is very careful to put the deductions in that order:

    (a) 10% for selling costs, and then
    (b) any secured “incumbrance”

    If you think about it, the estate agent’s commission and solicitors’ fees are the same whether there is a mortgage or not, so it is logical that you deduct 10% of the full market value”.

    #88587
    Inga Mycroft
    Participant

    I agree with you completely Peter but I’m in the minority in the office!

    Why is the LA2 form set out the way it is if we have to add encumbrances back on to the valuation given, to then take 10% off and then take the encumbrances off again. Why don’t they just give us a gross figure and let us sort out the encumbrances as they do for non-joint properties. Even in the strange world of benefits it seems odd to me.

    As an aside, in this case say the jointly owned property had a joint mortgage of say £100000 (just a random number for this question) does the VOA take into account the full mortgage when calculating any incumbrance or just 25% as this is the deemed share of the property (although I assume they would be jointly and severly liable for the whole mortgage).

    (I knew I shouldn’t have got involved in this case….)

    #88588
    Anonymous
    Guest

    [quote:65cb8f152a]does the VOA take into account the full mortgage when calculating any incumbrance or just 25% [/quote:65cb8f152a]
    You will need to get a full breakdown of the calculation from the VOA. They are normally pretty good at providing these, as long as you don’t leave it too long after obtaining the initial valuation.

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