ADVISER: Deprivation of capital

When Brian first spoke to Housing Rights, he was living in a private tenancy and his only income was carer’s allowance. He was in arrears with his rent and at risk of eviction by his landlord. At this stage, Brian was not entitled to Housing Benefit, but our adviser agreed to take on his case and look into how she could help him.  

Notional capital

Brian received personal injury compensation of £120,000 several years ago, but due to a serious gambling addition no longer has any of this money.  This was going to cause problems for Brian as  Housing Benefit will not be paid if an applicant has more than £16,000 in capital.  Regulation 46 of the Housing Benefit (NI) Regulations 2006 states that a claimant shall be treated as possessing capital of which he has deprived himself for the purpose of securing entitlement to Housing Benefit, or increasing the amount of that benefit.  This type of assumed capital is referred to as "notional capital".   There was a very real risk that Brian's claim for benefit would be disallowed as the Housing Executive could treat him as being in possession of £120,000.  Our adviser would need to be able to show that Brian had not disposed of his compensation money in order to become entitled to Housing Benefit.

Due to the nature of his addiction and how the money had been spent, Brian had no receipts to prove where the money had gone and so it was likely that he would be considered to still have notional capital of £120,000. 

Using legislation and case law to secure positive outcomes for clients

Brian's adviser, Clare, felt that Brian could be entitled to Housing Benefit if she could show that he had not intentionally spent his compensation in order to gain access to the benefits system.  She also identified that money awarded to a claimant as personal injury compensation was amongst the listed capital disregards.  Schedule 7 to the Regulations identifies categories of capital sums which can be disregarded for 52 weeks for the purposes of Housing Benefit, including any compensation made as a result of personal injury and, in certain cases,  any funds from a trust set up as a result of a payment for personal injury compensation.  Advisers should note that the law and procedures surrounding funds in trusts are complex and there are various conditions attached to these.  In order to protect your client, advisers should speak to a specialist legal adviser before providing clients with any guidance in this area. 

Clare used the Regulations and the case law to argue that Brian should be entitled to Housing Benefit, and made a written submission on his behalf.  Case law in this area states that to be satisfied that a claimant deprived themselves of capital for the purposes of securing Housing Benefit, this must have been their “positive intention” and a “significant operative purpose” of their actions. With the help of medical evidence, Clare was able to show that Brian’s intention and operative purpose was not to secure benefits for himself, but that his actions were as a result of his addiction.

Housing Benefit claim successful

The Housing Executive accepted Clare's arguments and decided that Brian was entitled to Housing Benefit, and would not be considered as having notional capital or to have deprived himself of money for the purpose of securing benefits. The payment was also backdated to the date when Brian made his initial claim. This backdated payment cleared a substantial amount of Brian's arrears and Clare negotiated a repayment plan to clear the remainder in a matter of months.  Brian's landlord agreed not to proceed with possession action and said he was happy for Brian to remain in his home as long as he kept to the agreed payment plan.  Clare was delighted to have had such a positive impact on Brian's life and Brian was thrilled to learn he wouldn't have to leave his home. 

Housing benefit resources

Advisers who are unfamiliar with the rules surrounding Housing Benefit may find our upcoming training of interest.  We are running an introduction to this benefit "Housing Benefit: The Basics" on the 19 May.   If you'd be interested in a more advanced look at Housing Benefit so you can offer the same level of assistance as Clare could in Brian's case, please contact Bronagh McCulla our Training Officer on 028 9024 5640 to add your name to the waiting list for our next advanced Housing Benefit event. 

Chapter 9 of Housing Law in Practice NI contains detailed information on Housing Benefit, including a summary of the rules around capital, notional capital and capital disregards.  Members of Housing Rights can access this essential housing resource by logging in and clicking the HLPNI icon in the menu bar of the website.  If you don't know your login details, please contact Frances McGrath.