Terms & Conditions

[lizc]

If a claimant owns two houses (in addition to the one he lives in) – do we establish the capital value of each one independently or do we establish a combined overall capital value? It will make a difference in this case as one is in negative equity, so is that simply a nil and the other has a value, or do we take both into account together in which case we offset the negative equity of one with the value of the other?

I can’t seem to find any hint of which way to go within the way the regs are worded. Is anyone able to offer any opinion and why they think that?

Thanks very much!

[Mark]

HB Reg 47(a)(ii) says that you should deduct “the amount of any encumberance secured on it”. This suggests to me that the “negative equity” of house A cannot be counted as an encumberance on house B. So I’d count each separately.

[peterdelamothe]

I agree in the same way as you wouldn’t ofset a credit card debt against a bank account balance. Just one point – is the customer in the property business in some form? Lettings renovation? If so, the capital value is ignored of course.

[Author]

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