Generic selectors
Exact matches only
Search in title
Search in content
Filter by Categories
Allocation
ASB
Assured Shorthold tenancy
assured-tenancy
Benefits and care
Deposits
Disrepair
Homeless
Housing Conditions
Housing law - All
Introductory and Demoted tenancies
Leasehold and shared ownership
Licences and occupiers
Mortgage possession
Nuisance
Possession
Regulation and planning
right-to-buy
secure-tenancy
Succession
Trusts and Estoppel
Unlawful eviction and harassment

Equitable interests and right to buy discounts

A fairly abstruse discussion after the recent fun and games, but, to someone like me who was intrigued and amused while studying equity, an enjoyable one.

A recent case involved the client’s equitable interest in an ex-council house, formally purchased by the tenants, but the client stood guarantor and paid over half the mortgage, following an oral agreement that all three would ‘share’ the ownership.

The other side had denied any agreement and claimed the client was paying rent, but the evidence was strong enough for an agreement to be inferred by the Court in a Lloyd’s Bank type 2 form, although not for the 50/50 that our client maintained. So, a constructive trust/proprietary estoppel (Oxley v Hiscock [2004] EWCA Civ 546 having effectively conflated the two).

The question then was the apportionment of interest. The facts as found by the Court were that our client had paid something like 70% of the mortgage, and that the other side had attracted a discount of some 45% on the purchase price as a result of their tenancy on the right to buy. There were other payments and expenses for both sides, but no deposit.

Naturally, the other side argued for the 45% as their contribution, so that any share to our client would have to be in the remaining 55% (so say 22.5% max). They relied mainly on a reading of Springette v Defoe [1992] 2 FLR 388 where the RTB discount was treated as a fixed contribution. Unfortunately for them, the issue of the discount was agreed by the parties rather than argued at the Court of Appeal.

We rehearsed the recent history from Lloyds Bank v Rosset [1991] 1 AC 107 through Oxley v Hiscock. In each case, the Court had taken the position that although it was entitled to consider the RTB discount as a contribution, where there was no express agreement between the parties as to share, the contribution was part of a whole course of dealing and it was this that the Court should consider.

Our argument was that each of these cases was a resulting trust case, hinging on initial contribution to purchase. So if the discount was a factor but not a fixed point in these cases, then it should be even less of a weight in a constructive trust case, based on a post purchase course of dealing (on both sides).

The Court seemed to largely accept this, pointing out that the discount would have been valueless without our client enabling the mortgage. In the judgement, the Court firmly declared that it was not bound in the way it should consider the discount, that its governing principle was that of equity and that the discount formed a part of a consideration of all the circumstances or ‘the whole course of dealing’. Following Oxley, of course, but a clear statement of equitable principle in constructive trust

Our client got 40%, which seemed about right to me on the facts. The client had had benefits in terms of living expenses, Council tax and so on that were also weighed.

Some feel there is a danger in not having the discount as a fixed consideration. Certainly, one can imagine situations – say where that has been one partner’s sole contribution because that was all they had – where it would seem unfair for the discount to be, erm, discounted. But, as the Court stressed here, equity is the governing principle, fairness in the circumstances, and that seems to me to be right, as those circumstances can vary from utter shams to the completely deserving.

Nothing earth shaking then, but a clear statement of position. It was also interesting to see this worked out in a non-marital/partnership situation.

There was an intriguing second string argument on subrogation, should constructive trust fail, but I need to brush up on the details before I can render it.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

6 Comments

  1. Stephanie

    Hi Mr Peaker

    I have been trying to find out where do I go to find about how to purchase my property. I have been an assured tenant since 1992. Before that I lived in a council flat for 8 years before having my son. I have lived in my current property for 25 years. To which I would like to buy.

    It just seem that every rout I take I get knocked back as they say I’m an assured tenant. Is this right and if so how can I fight this as this is so unfair as I moved in the property in 1992. It just seems I don’t have any rights.

    Can you help or advise I feel very on my own in this situation. I love my home

    Thank you.

    Stephanie

    Reply
    • Giles Peaker

      We can’t advise on individual cases. But in general housing association assured tenants do not have the right to buy (unless the housing association took over the property from the council). There is the new ‘voluntary’ right to buy for housing associations, but that is going to depend on your housing association and what, if anything, they offer in that respect.

      Reply
  2. Stephanie Forde

    Hi Stephanie
    I am in the same boat as yourself. I moved into my property in 1992. Previously to that I also lived in council flat for 8 years before having my son.

    Like you I have tried various avenues. It was nice to see that some else is having the same issues.

    I feel that I’m banging my head against a brick wall.

    Stephanie

    Reply
    • Giles Peaker

      Well, that would be because Housing Association assured tenants don’t have the right to buy. The ‘voluntary right to buy’ might be offered by some HAs, if that ever actually comes about.

      Reply
  3. Stephanie Forde

    How wouldn’t the voluntary purchase work.

    Reply
    • Giles Peaker

      Because the ‘voluntary’ bit is whether or not the housing association decides to offer it at all, and if so, who to. And the scheme has not started yet. Given that it depends on government funding, it is not clear if it will ever start.

      Reply

Leave a Reply (We can't offer advice on individual issues)

This site uses Akismet to reduce spam. Learn how your comment data is processed.