| SECTION 7 - TREATMENT OF PROPERTY
General
7.001 If the capital asset is a house or land there are
circumstances under which its value must be disregarded indefinitely and circumstances
where its value must be taken fully into account. Local authorities also have an element
of discretion over whether to take the value of a property into account see 7.007.
Property to be disregarded
7.002 The value of a dwelling normally occupied by a
resident as his home should be ignored if his stay in a residential care or nursing home
is temporary and
• he intends to return to the dwelling, and the
dwelling is still available to him, or
• he is taking steps to dispose of the property in
order to acquire another more suitable property for the resident to return to.
Only one dwelling can be disregarded in these
circumstances.
NB. If the resident's stay is initially thought to
be permanent but turns out to be only temporary, the dwelling he normally occupies as his
home should be treated in the same way as if he had been temporary from the outset.
Schedule 4 para 1
7.003 Where the resident no longer occupies a dwelling as
his home, its value should still be disregarded where it is occupied in whole or in part
by
• the resident's partner or former partner (except
where the resident is estranged or divorced from the partner/former partner)
• a relative of the resident or member of his family
(ie another person for whom the resident shall be treated as responsible) who
• is aged 60 or over, or
• is aged under 16 and is a child whom the resident is
liable to maintain, or
• is incapacitated.
Schedule 4 para 2
Meaning of relative
7.004 The term "relative" in paragraph 7.003 is
defined to be any of the following
A. parent (including an adoptive parent)
B. parent-in-law
C. son (including adoptive son)
D. son-in-law
E. daughter (including adoptive daughter)
F. daughter-in-law
G. step-parent
H. step-son
I. step-daughter
J. brother
K. sister
L. grandparent
M. grandchild
N. uncle
O. aunt
P. nephew
Q. niece
R. the spouse or unmarried partner of any of A to K
inclusive.
Meaning of "incapacitated"
7.005 The meaning of "incapacitated" in paragraph
7.003 is not defined in the regulations. It will be reasonable to conclude that a relative
is incapacitated if either of the following conditions applies
i. the person is receiving one (or more) of the following
social security benefits
Incapacity Benefit, Severe Disablement Allowance,
Disability Living Allowance, Attendance Allowance, Constant Attendance Allowance, or an
analogous benefit;
or
ii. the person does not receive any of the benefits listed
in (i) but the degree of incapacity is equivalent to that required to qualify for any one
of those benefits. Medical or other relevant evidence may be needed before a decision is
reached.
Property acquired but not yet occupied
7.006 Where the resident has acquired property which he
intends eventually to occupy as his home, disregard the value of the dwelling for up to 26
weeks from the date the resident first takes steps to take up occupation, or such longer
period as is considered reasonable.
Schedule 4 para 16
Discretion to disregard property
7.007 Where the local authority considers it reasonable to
do so, they can disregard the value of premises not covered in paragraphs 7.002-006 in
which a third party continues to live. local authorities will have to balance the use of
this discretion with the need to ensure that residents with assets are not maintained at
public expense. It may be reasonable, for example, to disregard a dwelling's value where
it is the sole residence of someone who has given up their own home in order to care for
the resident, or someone who is an elderly companion of the resident particularly if they
have given up their own home.
Schedule 4 para 18
7.008 Where the local authority has decided to disregard
the value of a property, it is left to the local authority to decide if and when to review
that decision. It would be reasonable, for example, where the authority has been ignoring
the value of a property because a long term carer was living there, for the authority to
begin taking account of the value of the property when the carer dies or moves out.
Property to be taken into account
Legal and beneficial owners
7.009 The treatment of property will depend on whether the
resident is a legal or a beneficial owner. A legal owner is a person in
whose name the property is held. A beneficial owner is one who is entitled to receive the
profits or proceeds of property. In most cases the legal and beneficial owners will be the
same person but, where this is not the case, the value of the property will be valued
according to the following paragraphs.
Legal ownership
7.010 For the purposes of assessing the resident's ability
to pay a charge no account should be taken of the value of a property where the resident
is a legal owner but has no beneficial interest in the property ie the resident is holding
the property on trust for
the beneficial owners and has no right to the proceeds or
profits should the property be sold.
Beneficial ownership
7.011 Where the resident is the sole beneficial owner of a
property the capital value should be taken into account in full. If the resident and the
local authority agree that the value of the property, after taking into account any
deductions in 6.010 (expenses of sale and debts secured on the asset), is over £16,000,
or when added to any other capital assets will take the total capital over £16,000, a
precise valuation will not be needed. If the resident disputes the value, or there is some
doubt as to the value, a professional valuation should be obtained.
Joint beneficial ownership of property
7.012 Where a resident is a joint beneficial owner of
property, ie he has the right to receive some of the proceeds of a sale, it is the
resident's interest in the property which is to be valued as capital, and not the
property itself. The value of this interest is governed by:
1. the resident's ability to re-assign the beneficial
interest to somebody else
2. there being a market ie the interest being such as to
attract a willing buyer for the interest.
Reg 27(2)
7.013 In most cases there is unlikely to be any legal
impediment preventing a joint beneficial interest in a property being re-assigned. But the
likelihood of there being a willing buyer will depend on the conditions in which the joint
beneficial interest has arisen.
7.014 Where an interest in a property is beneficially
shared between relatives, the value of the resident's interest will be heavily influenced
by the possibility of a market amongst his fellow beneficiaries. If no other relative is
willing to buy the resident's interest, it is highly unlikely that any
"outsider" would be willing to buy into the property unless the financial
advantages far outweighed the risks and limitations involved. The value of the interest,
even to a willing buyer, could in such circumstances effectively be nil. If the local
authority is unsure about the resident's share, or their valuation is disputed by the
resident, again a professional valuation should be obtained.
7.014A If ownership is disputed and a resident’s
interest is alleged to be less than seems apparent from the initial information, the local
authority will need written evidence on any beneficial interest the resident, or other
parties possess. Such evidence may include the person’s understanding of events,
including why and how the property came to be in the resident’s name or possession.
Where it is contended that the interest in the property is held for someone else, the
local authority should require evidence of the arrangement, the origin of the arrangement
and the intentions of its future use. The law of equity may operate to resolve doubts
about beneficial ownership, by deciding what is reasonable by reference to the original
intentions behind a person’s action, rather than applying the strict letter of the
law.
Example
The resident has a beneficial interest in a property worth
£60,000. He shares the interest with two relatives. After deductions for an outstanding
mortgage, the residual value is £30,000. One relative would be willing to buy the
resident's interest for £5,000.
Although the value of the resident's share of the property
may be £10,000, if the property as a whole had been sold, the value of just his share is
£5,000 as this is the sum he could obtain from a willing buyer.
The resident’s actual capital would be £4,500 because
a further 10% would be deducted from the value of her share to cover the cost of
transferring the interest to the buyer.
Property held in a shared trust
7.015 Where a property is held in Trust and the resident is
both a joint trustee and joint beneficiary, he legally owns the property as a
trustee of the Trust, but purely on a "fiduciary" basis ie he is legally obliged
to administer the Trust for the benefit of the Trust - as a whole, and not for his own
particular purposes. His real interest is that of a beneficial owner, and
falls to be valued accordingly (paragraphs 7.012 to 7.014).
Sale of jointly owned property
7.016 See the example at 6.062 for the consideration of
deprivation of capital where a jointly owned property is sold and the resident passes some
of his share of the proceeds to the joint owner.
Property owned but rented to tenants
7.017 Where a resident owns property, the value of which
takes the resident’s total capital above £16,000 and the property is rented to
tenants the resident will be assessed as able to pay the standard charge for the
accommodation (because of the level of capital). It will then be for the resident to agree
to pay the rental income (along with any other income) to the LA in order to reduce the
accruing debt. |
