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The Universal Credit Regulations (Northern Ireland) 2016

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PART 4Calculation of amount of housing costs element for owner-occupiers

Payments to be taken into account

8.—(1) Where an owner-occupier meets the payment condition, liability condition and occupation condition in respect of one or more relevant payments and the qualifying period has ended, each of the relevant payments is to be taken into account for the purposes of the calculation under this Part.

(2) No account is to be taken of any amount of a relevant payment to the extent that the conditions referred to in sub-paragraph (1) are not met in respect of that amount.

(3) Any particular payment for which an owner-occupier is liable is not to be brought into account more than once, whether in relation to the same or a different owner-occupier (but this does not prevent different payments of the same description being brought into account in respect of an assessment period).

The amount of a housing costs element

9.  The amount of the owner-occupier’s housing costs element under this Schedule is the aggregate of the amounts resulting from paragraphs 10, 11 and 13 in respect of all relevant payments which are to be to be taken into account under paragraph 8.

Amount in respect of interest on loans

10.—(1) This paragraph provides for the calculation of the amount to be included in the owner-occupier’s housing costs element under this Schedule in respect of relevant payments which are loan interest payments.

(2) Subject to sub-paragraphs (3) to (5), the amount in respect of the loan or loans to which the payments relate is to be calculated as follows.

Step 1

Determine the amount of the capital for the time being owing in connection with each loan.

Step 2

If there is more than one loan, add together the amounts determined in Step 1.

Step 3

Identify which is the lower of these 2 amounts—

(a)the amount resulting from Step 1 or 2 (as the case may be), and

(b)£200,000,

and, if both amounts are the same, that is the identified amount.

Step 4

Apply the formula—

where—

“A” is the amount resulting from Step 3,

SR” is the standard rate that applies at the date of the determination (see paragraph 12).

The result is the amount to be included under this Schedule in respect of loan interest payments.

(3) In the application of sub-paragraph (2) to a loan (or any part of a loan) which was taken out for the purpose of making necessary adaptations to the accommodation to meet the disablement needs of a person specified in paragraph 4(3) of Schedule 3—

(a)the loan (or the part of the loan) is to be disregarded for the purposes of steps 2 and 3, and

(b)“A” in step 4 is to be read as the amount resulting from step 1 in respect of the loan (or the sum of those amounts if there is more than one loan taken out for the purpose of making such adaptations) plus the amount (if any) resulting from step 3 in relation to any other loan or loans.

(4) Any variation in the amount of capital for the time being owing in connection with a loan is not to be taken into account after the relevant date until such time as the Department recalculates the amount under this Schedule by reference to the amount of capital owing in connection with the loan—

(a)on the first anniversary of the relevant date, or

(b)in respect of any variation after the first anniversary, on the next anniversary which follows the date of the variation.

Amount in respect of alternative finance arrangements

11.—(1) This paragraph provides for the calculation of the amount to be included in the owner-occupier’s housing costs element under this Schedule in respect of relevant payments which are alternative finance payments.

(2) The amount in respect of the alternative finance arrangements to which the payments relate is to be calculated as follows—

Step 1

Determine the purchase price of the accommodation to which the alternative finance payments relate.

Step 2

Identify which is the lower of these 2 amounts—

(a)the amount resulting from Step 1, and

(b)£200,000,

and, if both amounts are the same, that is the identified amount.

Step 3

Apply the formula—

where—

“A” is the amount resulting from step 2,

“SR” is the standard rate that applies at the date of the calculation (see paragraph 12).

The result is the amount to be included under this Schedule in respect of alternative finance payments.

(3) “Purchase price” means the price paid by a party to the alternative financial arrangements other than the owner-occupier in order to acquire the interest in the accommodation to which those arrangements relate less—

(a)the amount of any initial payment made by the owner-occupier in connection with the acquisition of that interest, and

(b)the amount of any subsequent payments made by the owner-occupier before the relevant date to another party to the alternative finance arrangements which reduced the amount owned by the owner-occupier under the alternative finance arrangements.

(4) Any variation in the amount for the time being owing in connection with alternative finance arrangements is not to be taken into account after the relevant date until such time as the Department recalculates the amount under this Schedule by reference to the amount that is owing in connection with the alternative finance arrangements—

(a)on the first anniversary of the relevant date, or

(b)in respect of any variation after the first anniversary, or the next anniversary which follows the date of the variation.

Standard rate to be applied under paragraphs 10 and 11

12.—(1) The standard rate is the average mortgage rate published by the Bank of England which, immediately before this Schedule comes into operation, has effect for the purposes of paragraph 12 of Schedule 3 to the Income Support (General) Regulations (Northern Ireland) 1987(1) (which makes provision as to the standard rate to be used in determining amounts applicable to a claimant in respect of income support).

(2) The standard rate is to be varied each time that sub-paragraph (3) applies.

(3) This sub-paragraph applies when, on any reference day, the Bank of England publishes an average mortgage rate which differs by 0.5 percentage points or more from the standard rate that applies on that reference day (whether it applies by virtue of sub-paragraph (1) or by virtue of a previous application of this sub-paragraph).

(4) The average mortgage rate published on that reference day then becomes the new standard rate in accordance with sub-paragraph (5).

(5) Any variation in the standard rate by virtue of sub-paragraphs (2) to (4) comes into effect—

(a)for the purposes of sub-paragraph (3), the day after the reference day referred to in sub-paragraph (4);

(b)for the purpose of calculating the amount of the housing costs element to be included under this Schedule in an owner-occupier’s award, on the day specified by the Department for that purpose.

(6) At least 7 days before a variation of the standard rate comes into effect under sub-paragraph (5)(b), the Department must arrange for notice to be published on a publicly accessible website of—

(a)the new standard rate; and

(b)the day specified in relation to that rate under sub-paragraph (5)(b).

(7) In this paragraph—

“average mortgage rate” means the effective interest rate (non-seasonally adjusted) of United Kingdom resident banks and building societies for loans to households secured on dwellings published by the Bank of England in respect of the most recent period specified for that rate at the time of publication(2);

“reference day” means any day falling on or after the date on which this Schedule comes into operation.

Amount in respect of service charge payments

13.—(1) This paragraph provides for the calculation of the amount to be included in the owner-occupier’s housing costs element under this Schedule in respect of relevant payments which are service charge payments.

(2) The amount in respect of the service charge payments is to be calculated as follows.

Step 1

Determine the amount of each service charge payment.

Step 2

Determine the period in respect of which each service charge payment is payable and, determine the amount of the payment in respect of a month (see sub-paragraphs (3) and (4)).

Step 3

If there is more than one service charge payment, add together the amounts determined in step 2.

The result is the amount to be included under this Schedule in respect of service charge payments.

(3) Where the period in respect of which an owner-occupier is liable to make a service charge payment is not a month, an amount is to be calculated as the monthly equivalent, so for example—

(a)weekly payments are multiplied by 52 and divided by 12,

(b)two-weekly payments are multiplied by 26 and divided by 12,

(c)four-weekly payments are multiplied by 13 and divided by 12,

(d)three-monthly payments are multiplied by 4 and divided by 12, and

(e)annual payments are divided by 12.

(4) Where an owner-occupier is liable for service charge payments under arrangements that provide for one or more service charge free periods, subject to sub-paragraph (5) the monthly equivalent is to be calculated over 12 months by reference to the total number of service charge payments which the owner-occupier is liable to make in that 12 month period.

(5) Where sub paragraph (4) applies and the service charge payments in question are-

(a)weekly payments, the total number of weekly service charge payments which the owner-occupier is liable to make in any 12 month period shall be calculated by reference to the formula—

(b)two-weekly payments, the total number of two-weekly service charge payments which the owner-occupier is liable to make in any 12 month period shall be calculated by reference to the formula-

(c)four-weekly payments, the total number of four-weekly service charge payments which the owner-occupier is liable to make in any 12 month period shall be calculated by reference to the formula-

where “SCFP” is the number of service charge free periods in the 12 month period in question.

(6) “Service charge free period” means any period in respect of which the owner-occupier has no liability to make one or more of the service charge payments which are to be taken into account under paragraph 8.

(1)

Paragraph 12 was amended by regulation 2(c) of S.R. 2004 No. 461; regulation 2(3)(c)(ii) of S.R. 2007 No. 475; regulation 2(2)(b) of S.R. 2008 No. 503 and regulation 2(2) of S.R. 2010 No. 340.

(2)

This is available on the Bank of England website: http://www.bankofengland.co.uk/statistics/bankstats/current/index.htm. The effective rate appears in Table G1.4 in the column headed “HSDE”.

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