Capital abroad

Client is a Portuguese national with ILR under EUSS. She has nil income but is currently receiving accommodation and subsistence support from social services. Social services helped her apply for UC in January of this year, but she was refused on the basis that she holds capital in excess of the upper limit, in the form of an apartment in Lisbon valued on the open market at €75k. The apartment is currently uninhabitable and lacks basic amenities (running water, sewerage). In any event, flights remain suspended between the UK and Portugal, and the client lacks the means to travel there in person. She is alienated from all her remaining family living over there. Legal title was transferred to her when she was a teenager, but her father was in occupation as a usufructuary.

Portuguese law has a concept of usufruct (‘usufruto’), a right to property in rem that entitles a usufructuary to use the property during their lifetime. The proprietor holds as a “bare owner” (‘raiz’), albeit they are free to dispose or sell the legal title. As far as I can tell, this is something like a common law life estate. When the usufructuary dies, the right is extinguished and reverts to the owner. The owner is then required to notify the land registry (‘Conservatòria do Registo Predial’) of the usufructuary’s death and pay a fee of €300 before they can dispose of or sell the property. (This, I suspect, is crucial to any argument about UC entitlement, but I can’t find clear guidance about this online. It appears that this is a condition precedent of sale, rather than a registration requirement triggered by transfer of legal title as under English law. It also appears that this has to be done in person at the Portuguese land registry, with notarised documents).

The client’s ability to sell the property would also depend on her ability to obtain further, costly documentation ( Another difficulty is the client’s unwillingness to sell, given the sentimental value attached to the property.

My question is how to approach this issue. I suspect the only possible argument to make is for a 6-month disregard under Sch.10, para 6 of the UC Regs. The issue here is (i) no identifiable decision/intention to sell (the evidence she’s already given UC is that she doesn’t want to sell); (ii) any steps she could have taken short of registering the usufructuary’s death (in person) at the land registry in Lisbon and obtaining the relevant documents required to sell would have been ineffectual. The ‘reasonable steps’ requirement is obviously sensitive to context/facts of a given case, but I wondered whether there might be some scope for saying that because no steps she could reasonably currently take could actually lead to the property’s sale, inaction was a reasonable step (probably not!). The clearest guidance I can find is ​R(SB) 32/83, which requires “overt action in furtherance of [the decision to sell] …which will normally take the form of putting the sale into the hands of a solicitor or estate agent” (para 10). I suspect the lack of a decision/intention to sell & and identifiable action to sell of any kind will be fatal, so the advice I’ve given was to contact estate agents/solicitors in Portugal and make a new claim for UC, evidencing this step.

This is where I wondered whether any arguments could be made on the basis that there would be a prior limitation on her ability to sell. I know that this is an argument which is considered and distinguished in R(IS) 1/01, in the context of limits/restrictions on the ability to administer an estate. Struggling to find further case law on this point, and I wondered whether this line of argument could be exported to UC?

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