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ESA: The capital value of a half share of a property which the occupier is unwilling to sell, is nil

17th June, 2022

PF v. Department for Communities (ESA) [2022] NI Com 5

Background

The claimant was awarded Employment Support Allowance (ESA) - first contributory and then income-related - from 2012.

In October 2018, the Department decided that the claimant was a part owner of a property which he did not occupy as his own home. The Department decided that the property should be treated as capital and valued the claimant’s share as £26,300. As this exceeded the capital limit of entitlement for ESA, the Department superseded and disallowed the claimant’s ESA award.

The claimant requested a mandatory reconsideration. On the basis of a Land and Property Services (LPS) valuation, the Department reassessed the capital value of the property as £22,000. As this was still in excess of the capital limit, the Department’s decision on entitlement remained unchanged.

The claimant appealed. His appeal was unsuccessful and he appealed to the Social Security Commissioner.

Legal issue

Regulation 110 of the Employment and Support Allowance (NI) Regulations 2008 sets the capital limit for income-related ESA at £16,000.

A number of disregards of capital are included at paragraphs 1-55 of Schedule 9.

Paragraph 4 of Schedule 9 provides that the following are disregarded:

‘Any premises or land occupied in whole or in part by-

(a) a partner or relative of a single claimant or any member of the family as the home where that person has attained the qualifying age for state pension credit or is incapacitated;

(b) the former partner of a claimant as the home; but this provision is not to apply where the former partner is a person from whom the claimant is estranged or divorced or with whom the person formed a civil partnership that has been dissolved.’

The claimant argued that the capital value of the property should be disregarded because it is occupied by his ex-wife who has limited capability for work.

The Department supported the appeal on a different ground. It questioned whether there was a real world market for the claimant’s half share in the property occupied by his ex-wife.

The Department relied on GB v. Department for Social Development [2015] NI Com 62 and GE v. Department for Social Development [2016] NI Com 73, which query the existence of a real world market for a half share interest in a property with an occupier unwilling to sell. The Department argued that there is an assumption underpinning those cases that the Courts would be unwilling to force a sale in such circumstances.

The Department submitted that the tribunal erred in law by accepting the LPS valuation in the absence of any reference to whether there was a real world market for the sale of the claimant’s share of the property.

Decision

The Commissioner acknowledged that the claimant’s wife is estranged from him. As a result, the disregard at paragraph 4 does not apply. That is because the claimant’s circumstances fall within the second part of paragraph 4(b):

‘…but this provision is not to apply where the former partner is a person from whom the claimant is estranged or divorced or with whom the person formed a civil partnership that has been dissolved.’

The Commissioner concluded that the tribunal did not err in law in applying the legislation.

However, the Commissioner agreed with the Department’s submissions on whether there is a real world market for a half share interest in a property that the occupier is unwilling to sell. On this basis, he allowed the claimant’s appeal and gave the decision that the tribunal ought to have given, i.e. that the property capital value is nil.

The Commissioner referred the case to the Department to assess the other aspects of the claimant’s entitlement.

For a full copy of the judgment, click here.