Reg 9 – former owner

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    Can anyone give any advice regarding problems we have regarding former owners.

    We have several cases where the claimant previously owned their property. They subsequently got into arrears with their mortgages, but not all were in a position where the mortgage lender was treatening to take further action. The claimants all answered an advert in local papers which stated that “Repossessions stopped and stay in your home free of charge – subject to terms. Buy the house back at a discount rate when ready”.

    They sold the property to the company concerned. An example is:the mortgage was redeemed eg. £30,000. but the valuation of the property was £75,000 & was not a market valuation but a valuation by the company who bought the property (market valuation came back at £100,000). The claimant did not receive any proceeds from the sale, the balance of £45,000 was paid to the person arranging the sale as commission (person who arranged the sale was the same as the person/company buying the property!).

    The claimant is not charged rent for 6 months, when they are then expected to start paying rent & claim HB (with the rent being much higher than the previous mortgage).

    In all cases the claimant has not looked at any other alternatives, i.e. advertising the property on the open market for the correct valuation, contacted the lender to look at alternatives methods of repayment etc.

    We are unsure how to proceed – there’s the former owner who has not shown that he’s unable to remain in the property without relinquishing ownership, if the tenancy is contrived by the landlord as he appears to be targeting people who have a large amount of equity in thier property & taking advantage of the HB scheme, the depravation of capital as in effect the claimants are giving away at least £30,000 as they don’t receive anything from the sale of the property at all.

    Any help/guidance would be great (I’m aware that Barnsley LA have had similar propblems with the same L/L). 😕 😕 😕


    From what you say they’re stuffed by 9(1)(h) unless relinquishing ownership to continue occupation was unavoidable. This is a very sad story indeed and I want to see the scam artists ripping people off like this put up against a wall and shot. I’d send the claimants concerned to CAB and refer all the cases to Trading Standards to see if they’d be prepared to investigate.

    Kevin D

    To offer a bit to the possibility of an alternative finding of contrived….

    If you rely on 9(1)(l) as an alternative, the nearest case law you’ll find is likely to be [b:20a594b8af]Baragrove[/b:20a594b8af] (see Findlay commentary to HBR 7(1)(l) as at 18th edition).

    Although the facts as a whole are different, there are a few principles that may be of use:

    1) HBR 9(1)(l) can be engaged if a third party is primarily responsible for the contrivance – there is no requirement to show that the clmt was party to the contrivance.

    2) “targeting” of a particular group, or class, of tenants by a third party will add weight to a case. Take a look at the L/L’s adverts, website, literature & paperwork (if possible) – do they refer to HB? Where are the adverts placed? (e.g. are they in locations / publications likely to be seen by either current, or prospective, benefit claimants?)

    3) the level of rent – is the rent being charged at a level that would be impossible to obtain other than through HB? If the case isn’t “exempt accommodation”, this aspect will be difficult to show as the rent will in any case be restricted to the ROD (or LHA).

    The crux is about the PURPOSE of creating the liability(ies). Was the purpose primarily to take advantage of the [u:20a594b8af]HB scheme[/u:20a594b8af]? Or, primarily to take advantage of [u:20a594b8af]customers[/u:20a594b8af] (irrespective of HB)? If the latter, there is no contrivance for HB purposes. All will depend on the evidence.


    Carol Meredith

    As an aside to this one, we have had a couple of flyers pushed through our door at home offering such a service. I have also seen an advert in the local press and after I had hurled torrents of abuse at the first flyer I was told they also advertise on local radio. Unfortunately I did not keep anything but will if I see anything else.

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