Would this be allowed?

Macro_3

tr82 wrote: »

I'm wondering if the DM wouldn't also consider the % of the purchase price that the deposit would represent, that the OP might be allowed to use savings to fund a minimal deposit to secure the mortgage and accommodation. But that they'd regard a higher deposit as unreasonable, bearing in mind both the mortgage and the house would still be in Sister's name.

i.e. it might be reasonable to use £10,000 to pay a 10% deposit. But it'd be unreasonable to use £50,000 for a 50% deposit, bearing in mind to get housed you might only have needed a 10% deposit in the first place. The OP thereby deprives herself of £40,000. Not at all. It would always make sense for the OP to put as large a deposit on the property as possible to minimise the mortgage.

But like Dookar says, the DM then has to prove "on the balance of probability" that the OP's deliberately deprived herself of that money to get benefit or an increased rate of benefit.

They could argue that, being financially competent enough to come to this agreement with her Sister, that it was reasonable to expect her to be aware of the capital rules for social security benefit. Or that she was sufficiently savvy to have known to at least query benefit entitlements with DWP.

DM's also tend to look at "what if" scenarios. What if the Sisters fell out, what arrangements would be in place to sell the property and refund the deposit ? This doesn't matter at this point - would only be a consideration if the whole thing fell apart and the OP was no longer living in the property.

I think they'd be looking for a written agreement between both parties to be provided in support of the application. Why? So long as the OP is a joint owner (and has not therefore 'given' the deposit to her sister) it doesn't matter.

Just get the feeling this one isn't cut and dried by any means.

I disagree, I think it's fairly clear cut. The OP is spending her money to secure a modest (presumably) mortgaged home for herself and her child. It is reasonable for a claimant to spend their money on the necessities of life. A roof over her head is a pretty basic need.

This is a quote from the DWP guidance manual:

"To decide whether securing entitlement to benefit was a significant purpose [...in depriving oneself of capital...], you must establish whether the claimant has exercised choice when disposing of the resource. If claimants do no more than satisfy their need for one of the necessities of life, they have not exercised a real choice in the transaction."

As I see it the OP has little choice. The interest earned on the capital is unlikely to be enough to cover rent other than in the short term, and if she spends her savings renting a home then sooner or later she will have no capital and will become reliant on housing benefits.

Quite apart from the above, lets assume that the OP has the minimum 16k needed to disentitle her from means tested benefits. Even 16k put in a decent ISA over 3 years would pay about £15 interest/week average over the 3 years. Her IS entitlement would be £26. No one could hope to show that on the balance of probability she would 'deprive' herself of her capital, spend thousands on solicitors fees/searches etc and take on a very significant debt (mortgage) in order to increase entitlement to benefit by £11/week.

If her capital is higher, then the figures become even more ridiculous. If she has £25k she'd be no better off with IS v. ISA over 3 years.

tr82

Yep, very valid points, even more so if the OP gets her name on the mortgage. If that happens there's a compelling case that deprivation has not occurred.

But if she doesn't and lives in an area where housing benefit routinely covers rent entitlements (and that is the position in many parts of the country, such is the current state of the rental market), there's simply no need to completely exhaust savings to get somewhere to live. She could just pay her deposit & month up front, with HB/LHA available to cover the ongoing payments. By doing so she retains most of her savings, possibly still qualifies for IS too (subject to tariff income) and gets perfectly adequate accommodation.

All comes down to the Decision Maker then.

OP, no offence intended by talking about you in "third party terms" !

Marcheline

No offence taken and thanks again to all who are replying. I didn't think I'd be entitled to housing benefit (LHA?) anyway, as my savings are in the region of 25k. To be honest, I would be hoping any potential IS claim to be a very short term thing.

I just think if I move out and rent, rather than find a way to buy, I will either risk become reliant on benefits (if I was able to claim LHA) or significantly reduce the capital renting privately until such time as my savngs are low enough to be able to claim LHA (which as a single mum would not be in our best interests, or the taxpayers, long term).

Any other thoughts, much appreciated.