Universal Credit and owning half a property, need advice

Chablar

Alice_Holt said:

Grumpy_chap said:

huckster said:

Won't be counted as capital held if FIL lives in the caravan. Benefits would not expect part owner of a home, to have to move out if sold or see the part they don't own sold to another person, which might then cause them problems. 

Just provide all of the information to UC and no doubt disregard for the capital value of part of the caravan would be applied.

Can you provide a source for this?
The only definitive disregard I could find was if the FiL is disabled or over SPA.
It would be very useful for the OP if there is a definite disregard that has to apply.

      OP  -  just to clarify re 'disabled'.  The DM guidance I linked to in the 3rd post on your thread, states:

      Premises lived in by a close relative The law

H2048 Premises that are occupied as the home by a close relative of a person are disregarded indefnitely where the close relative has
 1. LCW or
 2. reached the qualifying age for SPC..

 UC Regs, Sch 10, para 2

Note that LCW refers to Limited Capability for work (under UC).

These guidance pages would be useful for you to read when putting the case to DWP for disregarding the caravan. 
Para's H2031 on re more than one premises will be helpful to you.

Be aware that you have a right of appeal against any DM decision, and their judgement can be tested at tribunal.


I'll also repeat that you may wish to see if the site owner would give you a written valuation of your interest in the caravan (with FIL living there), as if this is helpful could be supplied to UC as evidence of value. I suspect any value in the caravan may be negligible.

I would tend to the view of huckster, but be aware that such DM decisions are judgements. I doubt that an exact parallel or disregard exists - but you may find examples in the guidance notes that have similarities.  
A tribunal judge would be aware of any case law that might apply (which a DWP DM may not).

Hi again Alice. 

My wife has Limited capacity for work and work related activity on the UC, and when I was looking into that I also looked in to the LCW part. There's no way my FiL would meet that criteria, he's in his mid 50's and works 2 jobs. I did take a look through the DM sheets you sent over, a lot of the disregards in there for family members loving in a home you own weren't an exact parallel. I do understand that this is a strange situation, with a few different elements making it more complicated than your average "I own half this house" ordeal. 

When it comes to a valuation from the site owner, I imagine they'd be able to value the property accurately enough but I imagine something such as "how much would you pay for half of this property when someone else lives there, and there's an age threshold" is harder to quantify. I worry they will just stick roughly half the £115,000 which will still put us way over the cap for capital. 

Thanks again Alice

Chablar

Grumpy_chap said:

Thank you for clarifying with regard to my use of the word "disabled" and the correct definition for this purpose being "LCW".  There is no indication from the OP that this is relevant in this case and the OP has confirmed that FiL is a good number of years away from State Pension.  
That all seems to mean that no automatic right of disregard exists.

I agree with your view that the value of half the caravan with FiL in residence and restrictions on ownership (over 50 site) may well be negligible. 
In this case, it may help to substitute the phrase "depreciating asset" in place of "caravan" as this makes the distinction between the caravan and a house rather clearer.  An investor may buy half of a house (at a large discount) with a sitting tenant on the basis of capital growth plus some rent in the mean-time.  It is unlikely an investor will want half of a depreciating asset.

I also agree that the disregard is reasonable given that FiL lives in the caravan and owns half.  The legal process to force a sale would be long and expensive.  The result to the state would be to make FiL homeless and then require social accommodation.  BUT, this all comes down to a DM applying discretion as there is no specific disregard dictated.

In fact, the simplest outcome might well be an official "peppercorn" valuation as there would then be nothing to disregard.

What do you mean by peppercorn valuation? I've not heard that term before. 

That's certainly my hope, that the discretion rules in a way that seems to make the most sense. The other doesn't seem to make a whole lot of sense. What if he refuses to sell up? Do we have to take him to court? Her mum has just died, would the DWP expect us to argue with him in court and leave him homeless, potentially damaging that relationship? Its ground i've not tread on before so i'm anxious how it will go. 

I appreciate the help on the language too, that's a good point. 

Thanks again Chap

Grumpy_chap

Chablar said:

What do you mean by peppercorn valuation? I've not heard that term before. 

A "peppercorn" valuation is literally that, it means of zero or negligible value.  Old legal contracts used to say something like "in exchange for one peppercorn if demanded". 
The concept still applies, for example if you want a new electricity supply installed, the electric company will require a legal right of access to provide you the service.  The agreement now would typically say that the electric company will pay £1 for the access right.

Chablar said:

I appreciate the help on the language too, that's a good point. 

With regard to the language and the use of the phrase "depreciating asset" in place of "caravan", in the example I used above, it was for own understanding.  
It may help when speaking with a DM to also ensure they are drawn to the nature of the asset, but I probably wouldn't do so in simply swapping the terms.  Maybe "caravan (which is a depreciating asset)" so that they are clear you don't mean a bricks-and-mortar house.

Chablar said:

When it comes to a valuation from the site owner, I imagine they'd be able to value the property accurately enough but I imagine something such as "how much would you pay for half of this property when someone else lives there, and there's an age threshold" is harder to quantify. I worry they will just stick roughly half the £115,000 which will still put us way over the cap for capital. 

I suspect the site owner has past experience of valuing "half" a caravan, especially given this is a site targeted at over 50 year olds.  This is unlikely the first time one tenant has died and the other wishes to remain and / or couples splitting up.

I doubt the site owner will simply take half the original cost.  Assuming the £115k was for a brand new caravan 5 years ago.  AIUI, depreciation is similar to the profile of a car so a 5 year old item would be less than half the new price.  Plus whatever deduction is then applied for restrictions etc.  If you use an on-line valuation site first, that will give you an initial indication.

Chablar

That makes sense, thanks. 

I'll speak to my father in law about the site owner. I remember him saying about their being a site manager and then a larger organisation who own the actual site. We will try and find the best way to get the caravan valued. 

Thanks again for all the help

huckster

Chablar said:

huckster said:

Won't be counted as capital held if FIL lives in the caravan. Benefits would not expect part owner of a home, to have to move out if sold or see the part they don't own sold to another person, which might then cause them problems. 

Just provide all of the information to UC and no doubt disregard for the capital value of part of the caravan would be applied.

Thanks Huckster. That's what I'm hoping anyway. The other outcomes wouldn't really seem to male a whole lot of sense but we've had an up and down history with the benefits and their decisions (mainly with PIP / DLA). I think im just worried about doing the right thing and declaring it trusting the process, then having our whole income upended.  I've been looking online to try and find some information/ testimonials from people in similar positions but I've had no luck. 

Thanks Huckster. 

Have seen  a number of decisions where DM has decided that no capital would be immediately available, as it is not practical for family in the event of inheritance to start legal proceeding against the close relative who owns 50% and is still living in the property.  The legal fees charged by a Solicitor could well be unaffordable to someone on benefits, if they were going to start process of trying to force a sale. And would there be any legal grounds to try this.

Who would want to buy 50% of a property with a sitting tenant?  Unlikely.  And the FIL may not be in any position to offer payment to buy the other 50% of the property from the inheritor. 

Grumpy_chap

huckster said:

Who would want to buy 50% of a property with a sitting tenant?  Unlikely.  And the FIL may not be in any position to offer payment to buy the other 50% of the property from the inheritor. 

There are some that would buy 50% of a property with a sitting tenant where that property is an ordinarily appreciating asset, i.e. a free-hold bricks and mortar house.  They'd buy at a substantial discount that takes into account life expectancy for the sitting tenant.  It is called "reversionary property investment" and seeks to make from the capital gain.  With the FiL being young, such an investor would offer peanuts.

Obviously, that investor would have no interest in a caravan because the depreciating asset negates any potential for future capital gain, so not going to be an option here.

With regard to the last point, the OP advised upthread:

Chablar said:

My FiL is mid 50 so he's still a fair way off pension age and he's definitely not in a position to buy the other share of the property. 
 

I am really rooting for the OP here that they can get some favourable news from a DM who takes the effort to understand the situation in full.

Chablar

Thanks, both of you. I'm going to put all of this in my contact with the DWP. I'll keep you all in the loop with any updates. I still think the only reasonable outcome is the capital being written off until its freed up by a willing sale, then it can be declared. But I guess we will see. Thanks again. 

Chablar

I've had some advice back from someone at Richardson Laine, they specialise in this area when it comes to benefits. They said the following:

"If you wanted to sell you would have to seek legal advice with a view to realising your share of the property, i.e. evicting your father-in-law from the property so you can sell this. You might be able to get an opinion that says this will be extremely difficult to do. In which case an opinion along these lines would further support that your wife's 50% share has a very low capital value."

Similar advice has also been mentioned here. The lady I spoke to was unable to elaborate further. Does anyone know who I could go to in order to obtain such a professional opinion in the matter? Would it be a solicitor or the company / individual we get in to value the property? 

Thanks again

Newly_retired

It is hard to find a solicitor who is able to advise with any competence and knowledge of the implications for welfare benefits. The valuation itself is a separate matter. 

I hope this situation reaches a successful conclusion for you.

sheramber

Does your local authority have a Welfare Rights section?