Is a charge on a house counted as capital?

Xirus

Hi,

I had to help my parents out a few years ago so with the profit I made from the sale of my house I paid off a debt for them. A solicitor advised me to have a charge placed on their property so whenever they sell I would be able to get my money back. I said no because I totally trust my parents, but my Mum said she wanted to do it for peace of mind.

Anyway, I am in the process of looking for somewhere to rent privately and was using one of those benefits calculators. Well one of the questions was "do you have any capital over £6000?".

Is the charge on the property counted as capital?

They also state that if you part own a property they automatically calculate £1 per £250 of earnings a week and this can affect the outcome.

I am not sure if a charge on a property would count as part owning a property, would it?

The charge I have is for £50k

Any advise would be very helpful

Thanks
Xirus

Prodigy

I imagine it is deemed as capital as you have a legal entitlement on the sale of the house but I am not 100% sure. This link below many help....on definitions of capital

http://www.dwp.gov.uk/docs/hbgm-bp1-assessment-of-capital.pdf

zzzLazyDaisy

The charge over the house isn't the same as owning property. In order to own property you have to be registered on the land registry title deed (and also the mortgage if there is one). So your answer to the question 'do you own property' is 'no'.

What the charge does do is to confirm that money is owing to you. However, I don't know whether this debt that is owed to you would be counted as capital for LHA/CTB purposes. Hopefully someone will be along soon who can answer that question.

EDIT - on reading the link kindly posted by Prodigy, it does seem that the charge may be counted as capital. The reason I say this is that there is a reference to 'chose in action' being viewed as capital.

"Choses in action" are property interests that are "out there", incapable of being grasped and which although of value, would require legal action to convert to cash. That is basically what a charge over the house is. You could apply to the court for an order that the house be sold to release the money.

However, I must reiterate that I am not an expert in these matters - this is just my reading of the document, which may be way off beam. Hopefully someone will be along soon with knowledge and experience of these matters.

Oldernotwiser

How many years ago did you give your parents this money? There might also be the question of deprivation of capital to be considered.

Xirus

Hi,

Thanks all for your insight into this matter, I really appreciate it.

:::Prodigy::: Thanks for the link it was most interesting. They really do try and cover every angle don't they.

:::zzzLazyDaisy::: I know what you mean about "Chose in Action" but would it still apply to me because there is no way on this earth I would sue and take legal action on my parents. I just could not live with myself.

:::Oldernotwiser::: The money was given during 2006, so five years ago.

I really hope it doesn't count as capital, just seems unfair until it becomes freely available. After all it's not really guaranteed money in the bank until I know I have it (if you know what I mean). Also I am not gaining anything from it either. As soon as was given to me I would declare it of course.


Regards

Oldernotwiser

When did you start to claim means tested benefits?

Prodigy

I am in no way an expert on this and my advice maybe wrong but by reading the link I posted, the fact that a charge has been posted and is in contract (I assume) in the deeds of the house then you have 'legal ownership on the capital' on sale of the house and have to declare it as you have a vested interest in the house but as this hasnt been 'realised' then it becomes a grey area. Look at section P 1.101 to P1.104 of the link sent to explain my reasoning. I would have a word with a lawyer again to see aswell.

zzzLazyDaisy

Xirus wrote: »

:::zzzLazyDaisy::: I know what you mean about "Chose in Action" but would it still apply to me because there is no way on this earth I would sue and take legal action on my parents. I just could not live with myself.

Unfortunately, if the charge is a 'chose in action' for the purposes of means testing, there is a high risk that it will apply to you. Why do I say this? Because it isn't (normally) open to a creditor to pick and choose when or if they decide to access money 'available' to them, in order to claim benefits instead.

Actually I agree with you - but I'm a lawyer and that is how I read the document that was posted above. However, as I said, I don't claim to be an expert in these matters in any way. I think you need more specialist advice.

Since your claim concerns LHA/CTB I'd e-mail the local authority and ask the question.

Xirus

Thanks all I will e-mail the local authority and post my results here when I find out.

:::OldernotWiser::: I am not currenly claiming any means tested benefits. I just wanted to check what I maybe entitled to in the coming future months.

Regards

dmg24

I have had a quick read of the DMG and a legal charge in the way you describe is classed as capital. In fact the example given is pretty similar.

Oldernotwiser

dmg24 wrote: »

I have had a quick read of the DMG and a legal charge in the way you describe is classed as capital. In fact the example given is pretty similar.

Presumably because you could force the sale of the house or insist on repayments over a period?