Terms & Conditions

[Anonymous]

suppose someone is in a housing association shared ownership property, 50% mortgage 50% rent. Their circumstances change so they decide they’d be better off with 25% mortgage 75% rent. The housing association agree to this by buying back the 25%.This increases their HB entitlement. Would this be seen as a contrived tenancy and the increase in HB refused? thanks 😕 😕

[Trevor Kenward]

My view would be you would have to be certain of the motives behind such a change in that to treat as contrived you would need to be certain that the change was done purely to increase HB entitlement. If the reasons behind it were say because they could not aford the mortgage payments at 50% and that this was the primary motive for the change then I dont think you could prove (to the satisfaction of a Tribunal) that the change was contrived.

[markp]

I’m with Trevor on this, and I suspect that the the response will be “I couldn’t afford the mortgage at 50% so the HA agreed that I could reduce it in order to keep my home”. This is, I assume, the change in Circs referred to. Even if it were to increase HB entitlement, how would you actually prove it, since that onus would be placed on the authority.

Do I know what I'm doing? The jury's out on that........................

[Anonymous]

thanks to the 2 of you. 😀 i did try to post a reply just now but must have done something wrong.hope this works. i’m actually arguing from the other side of the counter- the housing Association i work for is considering making our shared ownership more flexible so people can “staircase down” as well as up. What bothers me is that both circular A1/1999 and commentary in the CPAG annotated guide refer to this exception only applying where the mortgage lender is “on the point of repossession” eg as in mortgage rescue. the last thing we want is to allow people this flexibility then find it makes things worse for them. what do you think?

[gerryg]

How about this excerpt from the HB Guidance Manual

[quote:5cc835db92]Claimant could not continue residing in property without transfer of ownership
3.68 This could happen for example when

a housing association agrees to take over ownership of the property and take on the ex-owner as a tenant

[b:5cc835db92]in cases of shared-ownership, a tenant cannot afford the payments on the percentage owned, and the housing association agree to take back a part of the ownership and enable the tenant to rent a larger share [/b:5cc835db92]

a claimant was so far in arrears with a mortgage, the lender was on the point of seeking legal possession [/quote:5cc835db92]

[Neil]

Have you considered Reg 9(1)(h) – HB not payable if they owned property within the last 5 years…. unless LA is satisfied that they could not continue to reside in the property as it was about to be repossessed…. (sorry that was a very lose interpretation that I just chucked in to the equation for you to mull over. I’ve not got time to think too hard about it myself right now!)

[gerryg]

Neil, I think that was what Glenys was worried about.

My quote from the guidance manual seems to positively encourage what Glenys is proposing.

However, I would add the caveat that the exeption to 9(1)(h) does say “he or his partner could not have continued to occupy”.

I am with Trevor on his view that you need to look closely at the motives of the parties. If this is just a money saving scheme then I would not allow the exception to apply.

[Anonymous]

Neil- yes I’d looked at that but was concerned about how strictly the exception was applied.
Gerryg- thanks for posting me that bit of guidance which to my shame i had missed. however it does go on to say:
”
3.68 While a claimant does not have to show the lender or housing
association was about to seek possession, they must show
there was noway they could reasonably retain ownership, and
that other means were explored

3.69 If the claimant states this is the case and they could not
continue residing in the property without the transfer of ownership,
the claimant
must provide you with the reasons for giving up ownership
is responsible for showing that this is the case and they would
otherwise have had to leave the property
should be able to provide written evidence such as letters from
the lender about action to be taken over arrears

3.70 You must examine the reasons for transfer of ownership and
evidence carefully to decide if the claimant’s actions are
reasonable in the circumstances. Consider each case on its merits.
3.71The transfer could be through a mortgage rescue scheme, or
through a private arrangement. ”
the problem would be that the lender we are likely to be using has already stated they very rarely take possession. and we would of course much prefer people to take this option before they get into dire straits. any more thoughts for me?

[Anonymous]

thanks GerryG. Unfortunately I’d posted my repsonse just before your latest reply came through.
I think we are going to have to approach the L.A. each time with individual cases, and maybe come up with some agreement with the lender about a format for a letter about re-possession action thats enough to persuade the L.A. of the direness of the situation without putting the lender into a moral dilemma.
thanks everyone.

[peterdelamothe]

But I think what Glenys is suggesting (and its good to see more RSL’s on this site) is that the RSL wants to operate a “staircase” that is completely flexible and is at its / the shared owners discretion. Presumably the tenant may not have a particular reason to move down the staircase? Maybe they would want to do so if they lost their job (because they could no longer afford to pay the mortgage)?

I think its a toughie. You could make a good argument on either side. I dont think 9 (1)(h) applies – that is about people who previously owned whereas this person would still own at least part of the dwelling – I think the reg would have to refer to a reduction in ownership to bite.

That leaves the dreaded taking advantage of the scheme. If the RSL had a policy that tenants could increase or decrease their ownership, the LA would be hard pressed I reckon. It is stated Government policy to increase the number and flexibility of shared ownership schemes.

On the other hand, what is stopping someone “renting” 95% of the property when they are entitled to HB and “owning” 95% when not. Ho hum.

[gerryg]

Glenys, our posts crossed in the post as it were.

I think you have answered your own question.

It is up to the claimant to show that they had no alternative but to transfer possession but they [i:242afc93bb]do not[/i:242afc93bb] have to prove they were about to be repossessed.

The lender states they rarely repossess but at some point all parties must be concerned if rent and/or mortgage arrears are building up.

At that point you could consider using the transfer of ownership as a way out.

Obviously each and every case would have to be decided on its own individual facts.

While I have been typing this I note that you have already responded again. We cross again!

[Anonymous]

thanks again GerryG. I think we’re on the same lines of thought.
But peter dela mothe’s points are interesting, in terms of the government’s stated aims. But I don’t follow the “reg 9 (1h) not applying argument. if you own a smaller percentage then that IS a reduction in ownership isn’t it? Or would it have to be an actual reduction, like losing ownership of the bathroom??? (horrible thought). 🙄

[Kevin D]

I follow exactly where Peter D’s argument is going.

Upon the relinquishing of a PROPORTION of a property, but still retaining any other proportion, ownership is still retained – there is no change in that status. There is nothing in HBR 9(1)(h) that refers either directly or otherwise to the degree of ownership in the context of the exception.

In my view, if the clmt still has ownership, the change in his/her share of that ownership doesn’t alter the fact s/he is still an owner. Therefore, ownership has never been relinquished.

Regards

[Anonymous]

Another point is that shared ownership tenants do not meet the definition of “owner” in HB Reg 2, unless either it or Reg 9(1)(h) has been amended in the last couple of weeks (there was talk of this a few months back wasn’t there?). Only a freeholder is an owner as defined in Reg 2.

[Author]

Posts