SCHEDULE 9ADEDUCTIONS OF MORTGAGE INTEREST FROM BENEFIT AND PAYMENT TO QUALIFYING LENDERS

Interpretation1

In this Schedule—

• “5 per cent. of the personal allowance for the single claimant aged not less than 25” means, where the percentage is not a multiple of 5 pence, the sum obtained by rounding that 5 per cent. to the next higher such multiple;

• “personal allowance for a single claimant aged not less than 25 years” means the amount specified in paragraph 1(1)(e) of column 2 of Schedule 2 to the Income Support Regulations;

• “Income Support Regulations” means the Income Support (General) Regulations 198714;

• “relevant benefits” means the benefits prescribed in paragraph 5;

• “specified part” shall be construed in accordance with paragraph 3.

Specified circumstances2

1

The circumstances referred to in regulation 34A are that—

a

the amount to be met under paragraph 7 or as the case may be paragraph 8 of Schedule 3 to the Income Support Regulations in determining the relevant beneficiary’s applicable amount is 100 per cent. of the eligible interest in his case;and

b

the relevant benefits to which a relevant beneficiary is entitled are payable in respect of a period of 7 days or a multiple of such period.

2

For the purposes of determining whether 100 per cent. of the eligible interest referred to in sub-paragraph (1)(a) is met in determining a relevant beneficiary’s applicable amount, no account shall be taken of any amounts not allowed under paragraph 10 (restrictions on payment of housing costs) or deducted under paragraph 11 (non-dependant deductions) of Schedule 3 to the Income Support Regulations.

3

In this paragraph, the expression “eligible interest” has the meaning it bears in paragraph 7 of Schedule 3 to the Income Support Regulations by virtue of sub-paragraph (3) of that paragraph.

Specified part of relevant benefit3

1

Subject to the following provisions of this paragraph, the part of any relevant benefits which, in accordance with regulation 34A, shall be paid by the Secretary of State directly to a qualifying lender ( “the specified part”) is a sum equal to the amount of the mortgage interest to be met under paragraphs 7 and 8 of Schedule 3 to the Income Support Regulations.

2

Where, in determining a relevant beneficiary’s applicable amount for the purposes of income support, an amount is not allowed or a deduction falls to be made in accordance with paragraph 10 or paragraph 11 of Schedule 3 to the Income Support Regulations (excessive housing costs and non-dependant deductions) then the specified part referred to in sub-paragraph (1) of this paragraph is the mortgage interest to be met under paragraphs 7 and 8 of Schedule 3 to the Income Support Regulations minus the amount not allowed or, as the case may be, the deduction made.

3

Where, in determining a relevant beneficiary’s applicable amount for the purposes of income support—

a

a sum in respect of housing costs is brought into account in addition to a sum in respect of mortgage interest;and

b

in accordance with paragraph 10 or paragraph 11 of Schedule 3 to the Income Support Regulations an amount is not allowed or a deduction falls to be made from the amount to be met under that Schedule,

then the specified part referred to in sub-paragraph (1) of this paragraph is the mortgage interest minus a sum calculated by applying the formula—

$\genfrac{}{}{0.1ex}{}{\mathrm{C}\times \mathrm{B}}{\mathrm{A}}$

where—

A

the eligible housing costs within the meaning of paragraph 1 of Schedule 3 to the Income Support Regulations;

B

the mortgage interest to be met under paragraphs 7and 8 of Schedule 3 to the Income Support Regulations which is payable to a qualifying lender by the borrower;

C

the sum which is not allowed or falls to be deducted in accordance with paragraph 10 or paragraph 11 of Schedule 3 to the Income Support Regulations.

4

Where a payment is being made under a policy of insurance taken out by a beneficiary to insure against the risk of his being unable to maintain repayments of mortgage interest to a qualifying lender, then the amount of any relevant benefits payable to that lender shall be reduced by a sum equivalent to so much of the amount payable under the policy of insurance as represents payments in respect of mortgage interest.

5

Subject to sub-paragraphs (6), (7) and (8), where the borrower is in arrears with the payment of mortgage interest on a loan which he is liable to make to a qualifying lender, then the specified part shall include a sum equal to 5 per cent. of the personal allowance for a single claimant aged not less than 25 years ( “an additional sum”).

6

Where the borrower is in arrears with the payment of mortgage interest in respect of more than one loan, the sum included in the specified part under sub-paragraph (5) shall not exceed 3 times a sum equal to 5 per cent. of the personal allowance for a single claimant aged not less than 25 years.

7

Except in relation to an award of income support made before 25th May 1992, where as a result of the operation of paragraph 7(1)(b)(ii) of Schedule 3 to the Income Support Regulations (only 50 per cent. of eligible interest payable during the first 16 weeks of payment of income support) a borrower is in arrears with the payment of mortgage interest in respect of a loan which he is liable to make to a qualifying lender no additional sum shall be included in the specified part by reference to those arrears.

8

Where the amount of any relevant benefits to which a relevant beneficiary is entitled is less than the sum which would, but for this sub-paragraph, have been the specified part, then the specified part shall be the amount of any relevant benefits to which the relevant beneficiary is entitled less 10p.

Direct payment: more than one loan4

1

This paragraph applies where the borrower is liable to pay mortgage interest in respect of two or more different loans.

2

Subject to the following provisions of this paragraph, the Secretary of State shall pay to the qualifying lender or, if there is more than one qualifying lender, to each qualifying lender—

a

a sum equal to the mortgage interest to be met under paragraphs 7and 8 of Schedule 3 to the Income Support Regulations in respect of each loan made by that lender, plus

b

any additional amount attributable to a particular loan which may, under paragraph 3(5), have been taken into account in calculating the specified part.

3

If, by virtue of deductions made under either paragraph 3(2) or 3(3), the specified part is less than the amount payable by the borrower in respect of mortgage interest, then the sum payable under sub-paragraph (2)(a) shall be minus such proportion of the sum subtracted under those sub-paragraphs as is attributable to the particular loan.

4

Paragraph 3(4) shall apply to reduce the amount payable to a qualifying lender mentioned in sub-paragraph (2) above as it applies to reduce the amount of any relevant benefits payable to a qualifying lender under paragraph 3.

5

Where the specified part is the part referred to in paragraph 3(8), the Secretary of State shall pay the specified part directly to the qualifying lenders to whom mortgage interest is payable by the borrower in order of the priority of mortgages or (in Scotland) in accordance with the preference in ranking of heritable securities.

Relevant benefits5

1

Subject to sub-paragraph (2), the following benefits shall be relevant benefits in addition to income support, namely, unemployment benefit, sickness benefit, invalidity benefit, retirement pension and severe disablement allowance.

2

The benefits referred to in sub-paragraph (1) are only relevant benefits when paid together with income support by means of the same instrument of payment.

Time and manner of payments6

Payments to qualifying lenders under regulation 34A and this Schedule shall be made in arrears at intervals of 4 weeks.

Fees payable by qualifying lenders7

For the purposes of defraying the expenses of the Secretary of State in administering the making of payments under regulation 34A and this Schedule a qualifying lender shall pay to the Secretary of State a fee of £2.50 in respect of each payment made under regulation 34A and this Schedule.

Qualifying lenders8

The following bodies and persons shall be qualifying lenders—

a

the Housing Corporation;

b

Housing for Wales;

c

Scottish Homes;

d

the Development Board for Rural Wales; and

e

any body incorporated under the Companies Act 198515 whose main objects include the making of loans secured by a mortgage of or a charge over land or (in Scotland) by a heritable security.

Election not to be regarded as a qualifying lender9

1

A body which, or a person who, would otherwise be a qualifying lender may elect not to be regarded as such for the purposes of these Regulations by giving notice of election under this paragraph to the Secretary of State in accordance with sub-paragraphs (2) and (3).

2

Subject to sub-paragraph (3), notice of election shall be given in writing—

a

in the case of the financial year 1992 to 1993, before 23rd May 1992 and shall take effect on that date; and

b

in the case of any other financial year, before 1st February in the preceding year and shall take effect on 1st April following the giving of the notice.

3

A body which, or a person who, becomes a qualifying lender during a financial year and who wishes to elect not to be regarded as such for the purposes of these Regulations shall give notice of election in writing within a period of six weeks from the date on which the person or body became a qualifying lender.

4

Regulation 34A shall not apply to a body which, or a person who, becomes a qualifying lender during a financial year for a period of six weeks from the date on which the person or body became a qualifying lender unless, either before the start of that period or at any time during that period, the person or body notifies the Secretary of State in writing that this sub-paragraph should not apply.

5

A body which, or a person who, has made an election under this paragraph may revoke that election by giving notice in writing to the Secretary of State before 1st February in any financial year and the revocation shall take effect on the 1st April following the giving of the notice.

6

Where a notice under this paragraph is sent by post it shall be treated as having been given on the day it was posted.

Provision of information10

1

A qualifying lender shall provide the Secretary of State with information relating to—

a

the mortgage interest payable by a borrower;

b

the amount of the loan;

c

the purpose for which the loan is made;

d

the amount outstanding on the loan on which the mortgage interest is payable;

e

any change in the amount of interest payable by the borrower;

at the times specified in sub-paragraphs (2) and (3).

2

The information referred to in heads (a), (b), (c) and (d) of sub-paragraph (1) shall be provided at the request of the Secretary of State when a claim for income support is made and a sum in respect of mortgage interest is to be brought into account in determining the applicable amount.

3

The information referred to in heads (d) and (e) of sub-paragraph (1) shall be provided at the request of the Secretary of State—

a

when a claim for income support ceases to be paid to a relevant beneficiary; and

b

once every 12 months notwithstanding that, in relation to head (d), the information may already have been provided during the period of 12 months preceding the date of the Secretary of State’s request.

Recovery of sums wrongly paid11

1

Where sums have been paid to a qualifying lender under regulation 34A which ought not to have been paid for one or both of the reasons mentioned in sub-paragraph (2) of this paragraph, the qualifying lender shall, at the request of the Secretary of State, repay the sum overpaid.

2

The reasons referred to in sub-paragraph (1) of this paragraph are—

a

that—

i

the rate at which the borrower pays mortgage interest has been reduced or the amount outstanding on the loan has reduced, and

ii

as a result of this reduction the applicable amount of the relevant beneficiary has also been reduced, but

iii

no corresponding reduction was made to the specified part; or

b

subject to paragraph (3), that the relevant beneficiary has ceased to be entitled to any relevant benefits.

3

A qualifying lender shall only repay sums which ought not to have been paid for the reason mentioned in sub-paragraph (2)(b) of this paragraph if the Secretary of State has requested that lender to repay the sums within a period of 4 weeks starting with the last day on which the relevant beneficiary was entitled to any relevant benefits.