Tenants in Common

JMtalk

Registered User
Oct 4, 2015
6
0
My mother is about to go into a care home. Her assetts are below the £23250 threshold apart from the property. I own half as tenant in common with her. I have read about CRAG guidelines saying her value is not just 50% of the valuation but what the value is to ‘willing buyer on the open market’. The guidance for the 2014 care act uses similar words as this supersedes CRAG. This could possibly be nil as who wants to buy half a share in a house where the other party does not want to sell.

So possibly my mother could be on LA rates which I am happy to top up to ensure a good home.

I cannot find any real current experience of what LAs are doing in this case. Has anybody any real life experience of such please ?
 
Last edited:

Kevinl

Registered User
Aug 24, 2013
6,050
0
Salford
Welcome to TP
It's a good question and it'll be interesting to see what answers you get from anyone who has recent experience of this situation.
CRAG no longer exists so forget anything you read it there, it's history. Under CRAG people did get a nil valuation on a shared ownership home, some of the members on here did it, but, now under the 2014 Care Act which came into force on 1st April 2015 the signs are that LA's won't be using the "willing buyer" clause as it's not in the Care Act and that they will value the asset in the financial assessment at half it's full market price.
I guess someone will take it to court one day and I suspect properties put in trusts will be treated as a deprivation of assets too but as yet I'm not aware of anyone testing it in court.
Let's see what actual recent experience people have actually had and what the LA's are telling people these days.
K
 

JMtalk

Registered User
Oct 4, 2015
6
0
Welcome to TP
It's a good question and it'll be interesting to see what answers you get from anyone who has recent experience of this situation.
CRAG no longer exists so forget anything you read it there, it's history. Under CRAG people did get a nil valuation on a shared ownership home, some of the members on here did it, but, now under the 2014 Care Act which came into force on 1st April 2015 the signs are that LA's won't be using the "willing buyer" clause as it's not in the Care Act and that they will value the asset in the financial assessment at half it's full market price.
I guess someone will take it to court one day and I suspect properties put in trusts will be treated as a deprivation of assets too but as yet I'm not aware of anyone testing it in court.
Let's see what actual recent experience people have actually had and what the LA's are telling people these days.
K

Mmmm

Department of Health
Care and Support Statutory Guidance
Issued under the Care Act 2014
Annex B: Treatment of Capital
Section 15

‘A capital Assett may have a current market value, for example stocks or shares, or a surrender value, for example premium bonds. The current market value will be the price a willing buyer would pay to a willing seller. The way the market value is obtained will depend on the type of assett. (My bold)

To me this looks generally the same as the CRAG guidelines and someone has to be interested in buying half a house and a value put on that, where the other half does not want to sell.
 

Kevinl

Registered User
Aug 24, 2013
6,050
0
Salford
The current market value will be the price a willing buyer would pay to a willing seller. The way the market value is obtained will depend on the type of assett. (My bold)
To me this looks generally the same as the CRAG guidelines and someone has to be interested in buying half a house and a value put on that, where the other half does not want to sell.

Well that's the question. Your bit in bold describes the seller/s as being willing, so the statement doesn't allow sellers to be unwilling, can the LA make the assumption (as stated in bold) that the sellers are willing even if that isn't the case? CRAG did say that an unwilling seller could create a Nil value as quoted in the original post there is nothing similar in the 2014 guidance notes. I read it that the underlying assumption is that a seller can be presumed to be willing.
I don't know that's why I'd like to hear what people are actually being told by social services as would the original poster.
What you're saying is a very good argument but if the LA can assume willingness to sell then are they doing that? It may be different LA's are taking a different view until a legal precedent is established.
K
 

JMtalk

Registered User
Oct 4, 2015
6
0
OK . They can assume it’s a willing seller but isn’t the point it has to be valued at what a willing buyer will pay. First find the willing buyer for half a house with little chance of an increasing financial gain. We are in an area where house prices are stagnant, and have been for years. North not south and a depressed area.

In our case our solicitor will handle this and if the LA wins the value we will not be too upset. The cup will at least be half full.

Just hoped someone could report some real life experiences . There should be some out there.
 

Pete R

Registered User
Jul 26, 2014
2,036
0
Staffs
Hi @JMtalk,

From reading posts on here this is what I believe is now happening.

If you as half owner of the property live in the property as your home then the value to another buyer is zero. If you are using the property as just an "asset" then the LA are entitled to value it accordingly.

When the CA2014 came into affect I remember reading that this was a deliberate intention of the New Act to get away from that old CRAG ruling of always being "Nil" value.

:)
 

Batsue

Registered User
Nov 4, 2014
4,893
0
Scotland
Hi @JMtalk,

From reading posts on here this is what I believe is now happening.

If you as half owner of the property live in the property as your home then the value to another buyer is zero. If you are using the property as just an "asset" then the LA are entitled to value it accordingly.

When the CA2014 came into affect I remember reading that this was a deliberate intention of the New Act to get away from that old CRAG ruling of always being "Nil" value.

:)

I hope that you are right as this is exactly the situation me and OH could find ourselves in if mum needs residential care within the next 2 years when I will be 60.
 

lemonjuice

Registered User
Jun 15, 2016
1,534
0
England
I have no actual experience, but my understanding is that the LA are likely to value the house as 50% and then put a deferred payment into action, so the deferred fees will be paid , either on the death of the other tenant or on sale of property when that person decides to move out.
Has huge implications and one i'm currently encouraging an unmarried cousin who lives with his mother to investigate as his mother is likely to need care before he reaches the age of 60, when I gather he would automatically be allowed to continue living there.
 

JMtalk

Registered User
Oct 4, 2015
6
0
Hi @JMtalk,

From reading posts on here this is what I believe is now happening.

If you as half owner of the property live in the property as your home then the value to another buyer is zero. If you are using the property as just an "asset" then the LA are entitled to value it accordingly.

When the CA2014 came into affect I remember reading that this was a deliberate intention of the New Act to get away from that old CRAG ruling of always being "Nil" value.

:)

‘If youare using the property as just an "asset" then the LA are entitled to value it accordingly.‘

Yes but that goes against a willing buyer. Has to be valued at what someone will pay for half a house, as it says in the guidance. What we need is someone who has real experience of this and how it went.
 

Pete R

Registered User
Jul 26, 2014
2,036
0
Staffs
I have no actual experience, but my understanding is that the LA are likely to value the house as 50% and then put a deferred payment into action, so the deferred fees will be paid , either on the death of the other tenant or on sale of property when that person decides to move out.
Has huge implications and one i'm currently encouraging an unmarried cousin who lives with his mother to investigate as his mother is likely to need care before he reaches the age of 60, when I gather he would automatically be allowed to continue living there.
An LA cannot just impose a DPA. All the property owners have to agree and even then the deferred amount may not meet the monthly fees.
 

JMtalk

Registered User
Oct 4, 2015
6
0
I have no actual experience, but my understanding is that the LA are likely to value the house as 50% and then put a deferred payment into action, so the deferred fees will be paid , either on the death of the other tenant or on sale of property when that person decides to move out.
Has huge implications and one i'm currently encouraging an unmarried cousin who lives with his mother to investigate as his mother is likely to need care before he reaches the age of 60, when I gather he would automatically be allowed to continue living there.

Yes if it is only home then he can continue to live there if he is over 60 and the property is disregarded in a LA assessment.
 

JMtalk

Registered User
Oct 4, 2015
6
0
An LA cannot just impose a DPA. All the property owners have to agree and even then the deferred amount may not meet the monthly fees.

Surely the deferred amount, likely to be a reasonable sum, will meet the fees for a period until it runs out then you are back to the LA level. In our case I reckon half the house plus continuing pension would last about 2.5 years before back to LA.
 

Louise7

Volunteer Host
Mar 25, 2016
4,683
0
In our case I reckon half the house plus continuing pension would last about 2.5 years before back to LA.

LA's don't tend to loan the full amount though, they build in a percentage for depreciation (to ensure that they get their loan back) and calculate how long someone is likely to live for - no idea how they calculate this! They then offer a loan figure based on the amount they are willing to loan. You might be able to get more specific details of the process by looking at your local LA website as not all LA's calculate DPA the same way or have the same loan interest rate.
 

Pete R

Registered User
Jul 26, 2014
2,036
0
Staffs
Has to be valued at what someone will pay for half a house, as it says in the guidance. What we need is someone who has real experience of this and how it went.
I doubt you are going to find that on here. The nearest I remember is a thread last year (maybe before) where someone was being taken to court by the LA for half a house to be included in the FA as it was not being used as a home and was just an asset.

Age UK FS38 offers a couple of cases as guidance. P11&12.
https://www.ageuk.org.uk/globalasse...perty_and_paying_for_residential_care_fcs.pdf

:)
 

Pete R

Registered User
Jul 26, 2014
2,036
0
Staffs
Surely the deferred amount, likely to be a reasonable sum, will meet the fees for a period until it runs out then you are back to the LA level. In our case I reckon half the house plus continuing pension would last about 2.5 years before back to LA.
My understanding of a DPA is that it does not work like that.

The LA will work out how much money can be deferred depending on the valuation of the property. They will then try to figure out how long the PWD will survive and then lend a monthly amount accordingly. Obviously it is very subjective and is open to recalculation at any time. It could cover the full monthly care cost but may not.
 

Pete R

Registered User
Jul 26, 2014
2,036
0
Staffs
@JMtalk

Surely if you are going to agree with A DPA then are not admitting there is an actual value to your Mother's share?:confused: Otherwise what are the LA going to have as collateral?:confused:
 

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