Schedule 6 paragraphs 2 and 3 – Disregarded property.

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  • #44860
    owst
    Participant

    Hello,

    a claimant is soon to receive her share in her former marital home, or around £55,000, which she plans to buy a new property with.

    Fine so far.

    The problem is she is planning on buying a derelict property, which she will not be able to move in to straight away.

    2 questions – firstly can we disregard the property for up to 26 weeks (or such longer period…) once she has purchased it under paragraph 2? She will be renovating the property prior to moving in. How long does it take to renovate a property on benefits alone?

    Secondly, paragraph 3 says that the proceeds of the sale are disregarded if they are to be used to purchase premises the claimant intends to occupy as their home, but is it a realistic intention if the house is derelict?

    Does the intention have to be realistic to satisfy paragraph 3, or is the fact that at some point in the future she does intend to occupy the property as her home enough?

    Many thanks.

    Jon

    #126684
    peterdelamothe
    Keymaster

    2. Any premises acquired for occupation by the claimant which he intends to occupy as his home within 26 weeks of the date of acquisition or such longer period as is reasonable in the circumstances to enable the claimant to obtain possession and commence occupation of the premises.

    3. Any sum directly attributable to the proceeds of sale of any premises formerly occupied by the claimant as his home which is to be used for the purchase of other premises intended for such occupation within 26 weeks of the date of sale or such longer period as is reasonable in the circumstances to enable the claimant to complete the purchase.

    It is an interesting question…firstly “any premises” in reg 2 suggests just that. It might be that she can only afford somewhere derelict. The intention must be to occupy it within 26 weeks but this can be extended if this is “reasonable” in the circumstances.

    Reg 3 just allows the capital / the cash to be disregarded. Para 3 has the additional requirement that the monies must have come from premises formerly occupied as a home. So just selling a marital property is not enough; she must have actually lived in it.

    So she gets the cash and she has told you she will be buying somewhere to live. It sounds like she has already identified what she intends to buy. You “ringfence” and disregard that cash for 26 weeks or more if she needs time to complete (buying property can be slow in England especially). She buys the premises and then has 26 weeks (or longer if this is reasonable) to renovate it. She must convince you that she intends to live there as her home. It cannot be a business venture for instance.

    One further point..if she gets £55K but only spends £40K on the property, is the resulting £15K her capital? Seems to be because it is no longer disregarded under reg 3..but it would be reasonable expenditure as and when she spent it on renovation.

    Finally, deciding what is “reasonable in the circumstances” is always the key here.

    #126811
    d-stainsby
    Participant

    The question is to be decided on a week by week basis (JH v SSWP[2009]UKUT1(AAC), but having said that, in CIS/8475/1995 (a self build case where the claimant had acquired a plot of land and planned to buld a bungalow) the commissioner held that a period of 18 months from the date of the claim for income support was reasonable.

    The Commissioner in CIS/8475/1995 also points out that the words “is to be used” in para 3 of Sch 10 to the IS Regs (identical to para 3 of HB Sch 6) do not have the same meaning as the test of intended occupation in par 2 (identical to para 2 of HB Sch 6). In the commissioner’s view the test in para 3 has an element of pracitcal certianty as well as subjective element.

    In CIS/685/1992 the Commisioner was more liberal and took the view that the 26 week period could be extended even in circumstances where no speficic premises that were intended for ocupation could be identified.

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