Capital deprivation?

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  • #32004
    keith j
    Participant

    2006/07: Mum and Dad (in their 90’s) “gift” property A to son (only child, would inherit eventually anyway), having had it on the market for 12 months (allegedly)

    Son remortgages property A for renovation and to recover costs of renovation on property B, and let’s Mum and Dad live rent free in property B. (Claiming they will keep it in good condition until the market picks up again and he could sell it)

    Surplus from mortgage £30K was “at solicitors suggestion loaned on a permanent basis back to my parents interest free”.

    Following “mental collapse” Dad goes into a “Home”

    2010: The market didn’t pick up so he decides he needs to charge rent at property B to cover the mortgage. Rent agreement drawn up, rent appears to be paid.

    2 months later along come the Pension Service and award PCGC, also advising mum should claim HB. They are aware of the £30K.

    Any comments? Tenancy appears genuine, explanations appear plausible (if a little convoluted). It’s the motive/intention I am struggling with.

    #89464
    Anonymous
    Guest

    I don’t see how the actions in 2006/2007 could have any relevence to a claim for benefit in 2010. I’d be looking at this purely from a reg 9 perspective.

    #89465
    Kevin D
    Participant

    Two salient questions immediately spring to mind:

    1) As part of the alleged deal, were the parents given the right to occupy property B? If so, it is likely any purported rent charge cannot be enforced.

    2) What would happen if not rent was to be paid (irrespective of whether HB is payable)?

    Also, is “deprivation” not an issue?** This may tie in to the first question above. For example, if they respond to the deprivation issue along the lines that “it wasn’t to obtain benefit because we thought we could live rent free….”, you’d potentially have your answer to “1”.

    Even if there is a delay between the disposal of the capital and the subsequent claim, it may still be arguable that subsequent reliance on benefit was a foreseeable consequence and, therefore, constitutes deprivation. There is conflicting case law on the “foreseeable consequence” point, but the more recent case law indicates future considerations can be part of the equation when deciding deprivation.

    Based on the info given so far, the following issues appear to be up for consideration:

    1) no actual liability (i.e. a sham); or
    2) non-commercial (this appears the weakest “limb” at the moment); or
    3) taking advantage;

    and/or

    4) capital exceeds – notional capital **

    ** PC(G) could only be overridden if:

    a) PC(G) entitlement was revised by the DWP; or
    b) if the LA could show the DWP’s decision was wrong in relation to the PC(G) decision – this would be a pretty high hurdle to clear.

    #89466
    Anonymous
    Guest

    I really think, given their age, they wouldn’t have deprived themselves of an asset with the intention of claiming benefit 4 years later. If it had been deprivation the claim would have followed much sooner. The fact they didn’t claim Pension Credit until much later suggest they didn’t have much knowledge of the benefit system or much interest in claiming.

    #89467
    keith j
    Participant

    Quote “Two salient questions immediately spring to mind:

    1) As part of the alleged deal, were the parents given the right to occupy property B? If so, it is likely any purported rent charge cannot be enforced.

    2) What would happen if not rent was to be paid (irrespective of whether HB is payable)? ”

    1) As far as I can make out the arrangement was informal until the Tenancy agreement was drawn up in April this year.
    2) Quoting the son from earlier corres. “Ridiculously if I were forced to evict my Mother, very very unlikely I agree, you would doubtless have to pay her higher costs elsewhere”
    So it seems although he is currently unlikely to evict, he hasn’t entirely ruled it out. although it is doubtful he would.

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