Terms & Conditions

[Anonymous]

I have a customer who received £40,000 in October for the sale of the previous marital home. She advised us her intention was to purchase a new house when her new partner returned to work. We have now received further bank statements and she has purchased a car, paid bills, repaid a loan and paid rent from this money. The balance is now £33,000. Her intention is to withdraw a further £1000 and the remaining balance will be set aside for the purchase.

Can we disregard the £33,000?

[petedavies]

I think you disregard it as long as you are satisfied the intent is there so no, I do not think you can disregard £33K – 1K is going to be withdrawn so there is no intent and as such it falls to be considered as capital leaving £32 to be disregarded.

The same applies to the other withdrawals, the money in its entirety only falls to be disregarded whilst there is an intent. As soon as that intent is no longer there then the money should be included until it is spent.

I also think that intent should have a degree of reality – are they likely to be able to buy when partner gets a job?, is the partner looking for work? If not I suspect you should be including it from the start

[Mark]

I agree with Pete.

As long as she is planning to buy this new home and move into it within 26 weeks of the date of sale then HB Regs Sch 6 para 3 applies. This would mean that £32,000 falls to be disregarded (for up to 26 weeks from the date of sale of the former home – or “such longer period as is reasonable in the circumstances to enable the claimant to complete the purchase”).

The other £1000 is counted for now, until such time as it is spent.

But if she’s planning to wait longer than 26 weeks from the sale of her old home before buying a new one then I’d say the whole sum should be counted right away.

All this assumes that the “working age” rules apply. If she’s 60+ then the rules are more generous – HB (Pensioner) Regs Sch 6 paras 18 and 20 have a disregard for one year from the “date of receipt” for all monies “paid to the claimant” or “deposited in the claimant’s name” “for the sole purpose of purchasing premises which the claimant intends to occupy as his home”. There is no requirement in this rule for the claimant to aim to be buying their new home within a set time limit.

[Kevin D]

I broadly agree with the above.

Pete has pointed to the issue which is the crux in this case – “intent”.

Although on an entirely different subject (occupancy & intention to return), it was found that “intention” must be realistic; a desire is not enough in itself – see [b:eda2944198]CSHB/0405/2005 (para 30)[/b:eda2944198]. On the face of it, there doesn’t seem to be any reason why a similar test should not be applied in this instance.

Another CD *may* be of interest – [b:eda2944198]CH/8475/1995[/b:eda2944198] (oddly, the second time today this has sprung to mind). Circumstances were very difference, but it may help in deciding what kind of time frame you apply to any disregard period.

http://www.osscsc.gov.uk/aspx/view.aspx?id=1586

[Anonymous]

The disregard is for as long as is reasonable. Once the disregard has been aplpied, the burden is then on the authority to show that it should no longer apply see R(IS)20/93

[Mark]

But it’s only for as long as reasonable in the working age rules. In the pensioner rules its a strict 1 year maximum. So the pensioner rule is only broadly (not wholly) more generous.

And even in the working age rules it’s only for as long as reasonable “to complete the purchase”. I used to think that the word “the” is important – because it implies that to disregard beyond 26 weeks there should at that point actually be a property that they are in the process of buying. If they’re just still looking to buy when 26 weeks have elapsed then I have always assumed that because it doesn’t say “a purchase” then the disregard could not continue. I’m having doubts about that now.

[Anonymous]

Mark is correct with regard to the over 60 rules but I dont think he is right that there should be an actual “purchase” before the 26 weeks for under 60’s can be extended.

The analysis in Findlay strongly implies that no actual “purchase” is needed.

Anyone who has ever been involved in a house buying chain will know that there is in fact no such thing as an actual purchase until the completion date, and even then it is entirely possible for the chain to collapse when all your belongings are in the van outside what was to be your new home.

If someone finds themselves in that position the actual purchase could take many months,and (at least in England) any party can drop out at any time. There is no such thing in house buying as a purchase until you pick up the keys

[Mark]

OK, so buying a house is a rough ride. But you can still tell whether a purchase is being pursued (i.e. is there something they are trying to buy or isn’t there?). The point, surely, is whether it matters that such a transaction is underway or not when 26 weeks have been reached. As I said, I’m back on the fence on that one, but I can’t see that the Findlay’s analysis helps one way or the other.

[Anonymous]

I agree that Findlay’s anlysis is very brief, but I would have expected them to flag up a complication such as that envisaged by Mark if it existed, but lets consider the most exteme scenario to illustrate my point

Suppose someone is in a chain for 26 weeks and the LA find out that the chain collapsed after that time because your claimant was gazumped at the last minute.

That “purchase” cannot be completed and the claimant must go looking again

If the first deal fell through in that way , the LA would then effectively be saying to the claimant “make any offer on any property and we will consider extending your disregard, but we will not let you take your time to find a suitable property, so make an offer and waste some money on a survey of the first property you see and before you look round again”

Common sense may sometimes be lacking in the legislation but until a Commissioner holds otherwise I would say that it should be interpreted in a common sense way whenever possible, so I would say that “the purchase” should be interpreted as meaning “the intended purchase”

[Author]

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