Council Tax - Liability of the Estate

Bill568

My mother lived in a flat that is part of an assisted living care facility. It was her main and only residence. She owns an interest in the flat via an Older Persons Shared Ownership Lease. She paid Council Tax with a 25% reduction, as she was the only resident in the flat.

My mother died in January 2020 and her executors, including myself, obtained Grant of Probate in April 2020. The Council (Vale of the White Horse, England) refunded an overpayment of her Council Tax for the year to end of March 2020. They have allowed 6 months exemption from the Grant of Probate date as a deceased person’s former dwelling and have sent the executors a bill for full council tax from October 2020.

Although an executor, I am not an expert. Please could someone point out why the Estate is liable for new increased Council Tax on a property that my mother no longer lives in? I understand that it is not an exempt Property any longer, thus the charge has started again. I had always thought that an Estate could not incur any new debts other than those that my mother would have been liable for if she was still alive. Or, is it because it’s a tax it can do whatever it wants?

macman

The estate is liable for all debts arising from the assets it now owns, regardless of whether they might have arisen during your mother's life or not. The LA have allowed a grace period of 6m from the date of probate and that period has now expired. There is no 25% SPD applicable, as the property is liable to the full rate, as it is unoccupied.
What is unclear here is the nature of your mother's shared ownership of the property? Who owns the rest, and in what shares?

Bill568

Thanks macman

My mother owns the maximum allowed 75% share of an Older Persons Shared Ownership lease. South Oxfordshire Housing Association (SOHA) [the Council] owns the 25% balance of the lease and the Property itself. As simple as I can get it, the ownership of a proportion of the lease entitles my mother to live in the flat, as long as she requires and pays for care.

My mother’s portion of the lease can be transferred (assigned) to someone else who also meets the minimum care standards, pays for care, pays towards the cost of the home and meets a number of other requirements set out by SOHA. The Estate itself has no entitlement or benefit under the lease other than they may be allowed the proceeds of selling the lease, if and when it is sold.

getmore4less

Standard class F exemption time period.

This comes up a lot on here.

Another example of why it is important to delay the obtaining of the grant as late as possible where there is property involved and it wont have a CT paying occupant and needs to be sold.

With an estate with no IHT to pay that can be close to the sale time.

Why has it not sold yet?


can't see anything about OPSO that would suggest exemption from CT

Bill568

Thanks getmore4less.

It seemed almost common sense to us, and I suspect it would to many others, to obtain a Grant of Probate as quickly as possible. This to ensure the Estate is ready and able to sell the major property asset as soon as there is interest to purchase it. Indeed some prospective buyers may not be interested if there is a likelihood of a Grant of Probate taking some time.

We were amazed it only took 2 months to obtain Probate. Particularly as it came through a few weeks after the 1st lockdown had started.

A shared Ownership Lease in a care facility is a great idea when you have a loved one’s immediate need for such a care facility, they live locally and qualify, and they have sold the family home. However, it seems that there are not so many people in this position and unfortunately for us not so much interest in purchasing the lease. A near identical flat in the same facility has just sold after being empty for 3 years.

The nearest I can get to an unoccupied exempt dwelling class is dwellings where occupation is prohibited by law. More accurately in this case, dwelling where occupation is frustrated by legal contractual requirements.

getmore4less

I understand the need and how ideal it can be many get caught by going new and not researching the second hand market when looking into retirement.

Was this a new or second hand purchase?

Round us the one bed in decent blocks are currently selling at around £90k-£100k, the asking often start at £130k

"Extra care" may be a harder sell if that is a requirement and not optional. 

Looking at the website they also offer rental options within the extra care properties
https://www.soha.co.uk/homes-and-services-for-older-people/independent-and-retirement-living/extra-care-housing/#sthash.VT9OyKi3.dpbs

Might not be ideal but do they allow rental of those part owned by others there may be demand for that option.  
Is there a  buy back option?

Bill568

A little off topic. Yes it is one of the extra care facilities. It was a 2nd hand purchase and proved to be ideal for my mother in her last years. I would not hesitate to recommend, however, you do have to be able to afford it.

SOHA are very open and helpful and maybe there might be an opportunity to rent if a sale cannot be found. Certainly, it is a complete waste to have the Property unoccupied when there are so many that could be looked after, happy and comfortable in occupation.

SOHA are bound by the terms of the loans and concessions they received from Government when they built the facilities. Some flats are 100% owned by the occupiers, some are shared ownership, some are rent only and some others are for local authority use. Unfortunately, the allocations are absolute and can’t change. If you rent and want to buy you have to physically move flat.

Do you think there is any mileage in trying to convince the Council that OPSO dwellings unoccupied pending sale of the lease should be exempt from Council Tax?

getmore4less

I was exploring options to get it occupied as we have been in this position before with a property.
We were able to install a student and it qualified for 100% discount.

CIS

Bill568 said:

lthough an executor, I am not an expert. Please could someone point out why the Estate is liable for new increased Council Tax on a property that my mother no longer lives in? I understand that it is not an exempt Property any longer, thus the charge has started again. I had always thought that an Estate could not incur any new debts other than those that my mother would have been liable for if she was still alive. Or, is it because it’s a tax it can do whatever it wants?

An estate is an entity that can create new debts and be responsible for old debts - for example they can instruct solicitors for the estate or be liable for various taxes.
Her estate holds the inferior leasehold interest therefore they have the council tax liability until the property is sufficiently occupied again or the lease is disposed of.

Bill568

Thank you CIS.

An OPSO lease both entitles and requires a specific person, the leaseholder, to be resident. After Grant of Probate the Estate holds the lease until it is assigned away. The Estate is liable for CT as it holds the lease, albeit a lease that specifically does not entitle or allow occupation. I think I get that.

The Council Tax legislation requires a chargeable dwelling and a liable person. The only reason a dwelling is not chargeable is if it is exempt. There are a number of unoccupied exempt dwelling classes including, a deceased persons former dwelling, which has already been allowed for 6 months. There is also a 1 month unoccupied /unfurnished dwelling which we might be able to claim. However, there is no further exemption for an OPSO dwelling unoccupied pending sale of the lease.

It seems that the Council does have some leeway under legislation in the case of unoccupied dwellings and will ask whether they are willing to exercise their judgment to provide further period of discount or exemption.

Brynsam

Bill568 said:

It seemed almost common sense to us, and I suspect it would to many others, to obtain a Grant of Probate as quickly as possible. This to ensure the Estate is ready and able to sell the major property asset as soon as there is interest to purchase it. Indeed some prospective buyers may not be interested if there is a likelihood of a Grant of Probate taking some time.

Absolutely. To delay obtaining it (or more accurately applying for it, when there is no guarantee of how long the process will take) is plain stupid if the only reason for doing so is to try and avoid paying council tax for what is normally a relatively short period of time.