Capital set aside to purchase new home

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  • #39117
    marlene
    Participant

    I have a case where a couple were previously living in New Zealand. In 2009 Mr came back to the UK for work and family reasons, Mrs remained in New Zealand until their property was sold in May 2010. The proceeds of the sale amounted to £258k, although they transferred funds in seperate transactions between May 2010 and February 2011 to take advantage of the exchange rate, this resulted in £275k being aset aside to purchase a property here. As at this point Mr was in employment they intended to get mortgage and purchase property in the UK for £500k. However Mr was made redundant in November 2010 so they had to reconsider the type of property that they could afford.

    In May 2011 Mr claimed JSA as he had been unable to find work, he was advised that the money he had set aside could be disregarded if it was to be used to purchase a property. On his HB application he indicated that he had been living off savings, therefore HB was refused as it was the decision makers view that the situation had changed. He has clarified that he was living off the interest, and a small amount of other savings in another bank account. The £275 is in a seperate account, and has not been used, and he maintains that he is still looking for suitable property to purchase, but that he has had to start his search again with a much smaller budget.

    My question, can this capital be disregarded? If so how much? £258k or £275k. Or is the fact that he sold his NZ home way over 26 weeks ago detrimental to his case. Incidently he is getting JSA, but only conts and the notes on CIS make no sense what so ever, and have no reference to capital, unless they have special codes.

    Any thoughts greatly appreciated. 🙂

    #110903
    Kevin D
    Participant

    The crux tests are intention and an element of certainty ([b]R(IS) 7/01[/b]). I’d be asking for firm evidence to support the clmt’s contention that he is genuinely looking for a home. If the clmt is simply keeping the monies on the back burner more in hope than with real intent, there is no disregard (ignoring the 26 weeks issue).

    In the current climate, it is a buyer’s market. On that basis, why is it so difficult for him to find a “suitable” property? For that reason, I’d be giving much closer scrutiny than usual when considering whether it is reasonable to allow the disregard beyond the already lapsed 26 weeks.

    If the clmt is unable to offer some distinctly compelling evidence, my inclination would be to take the monies into account.

    #110907
    marlene
    Participant

    Kevin, those were my initial thoughts, although at that time I did not realise how much time had elapsed since he completed the sale of his NZ home.

    He has provided me with emails from agents etc, and says that in the last 3 months since he has accepted that he will not find a new job as easily as he first thought and he has accepted that his budget is smaller than he would have liked, that he has viewed 40 properties but made no offers. He does however maintain that he will purchase a property and that he does still have that very real intention. I think reading between the lines that he is struggling with what his ‘new’ budget will buy him in West Sussex, and I guess he had just hoped that he would get another job, which would in turn give him more options. I guess its a judgement call on whether there is a genuine certainty and if what time to enable a purchase to happen is reasonable?!

    #110913
    Kevin D
    Participant

    Perhaps another 3 months? It could be suggested that the extra time would give him time to adapt to the budget and but, given the long long delay since, it isn’t REASONABLE to allow any further discretionary disregard – expecially taking into account the favourable market. In short, 40 properties? Favourable market? At another three months, I think the LA could argue the “reasonable” requirement has been well and truly exhausted given the overall background.

    On the “budget” issue, it indicates a couple of points. Either he has the budget for a “suitable” property in which case the market is entirely in his favour (even in Sussex) or, alternatively, if he argues the budget is too small, that surely demonstrates his “intention” isn’t realistic (i.e. it’s more of a “desire” than an “intention” – see CSHB/0405/2005 for the distinction between the terms in the context of temp absence).

    If you decide to extend the disregard for, say, another 3 months but are unlikely to extend it yet further, I would put this very clearly to the clmt so that he knows exactly where he stands – I’d definitely provide a broad outline of the reason(s ) why a further disregard is unlikely to be given, especially the favourable market.

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