April 2013


31.3.196 Low value homes – extent of this Part

This Part of the chapter gives guidance on the special provisions regarding a low value family home.  For clarification, the guidance relates only to a property that is a family home (see Part 3) and that qualifies as a ‘low value home’ (see paragraph 31.3.198).


31.3.197 Low value homes - background

There are certain restrictions on how the official receiver, as trustee, may deal with a low value home.  The intention of these legislative provisions is to recognise that the benefit to creditors in dealing with a low value home is often outweighed by the suffering imposed on the bankrupt and/or his/her family by the loss of the home.


31.3.198 Low value homes – definition

The legislation provides that a ‘low value home’ is one that is the family home (see Part 3) in which the bankrupt has an interest of £1,000 or lower [note 1] [note 2] [note 3].


31.3.199 Restrictions on dealing with a low value home

Where the official receiver, as trustee, is dealing with a low value home, he/she is may not make an application for an order for sale or possession of the property, or an application for a charge against the bankrupt’s interest [note 4].

If such an application is made, the court is bound to dismiss it and the interest in the property will automatically re-vest in the bankrupt unless the court orders otherwise [note 5].


31.3.200 Offers to purchase interest in low value home should not be invited

Where the official receiver is dealing with a low value home, he/she should not send the standard letter inviting offers to purchase the bankrupt’s interest (see paragraph 31.3.159) and, instead, the property should be transferred to the LTAU for later review (see paragraph 31.3.11).


31.3.201 Unsolicited offer received for bankrupt’s interest in a low value home

It is possible that the official receiver, as trustee, will receive, from the bankrupt or a third party, an unsolicited offer to purchase the bankrupt’s interest in the property prior to the two year and three month review (see Part 8).

The official receiver should give consideration to the offer received (taking into account the guidance in paragraph 31.3.165), accepting it if it is in the interests of the creditors to do so. 


31.3.202 Transfer of low value home for a nominal sum in exceptional circumstances

Where the bankrupt makes an approach to the official receiver requesting that his/her interest in the property be dealt with prior to the normal review period of two years and three months (see Part 8) in the exceptional circumstances that the extended uncertainty in determining the interest could cause undue distress and may exacerbate a disability (especially one that relates to mental health), or potentially cause a mental illness, the official receiver, as trustee,  may consider selling the bankrupt’s interest for a nominal sum (providing the costs of sale are provided to the official receiver too).


31.3.203 Examples of exceptional circumstances

An example of where it may be appropriate to apply for early re-vesting of a low-value home (see paragraph 31.3.87) would be where a disabled bankrupt (or a bankrupt with caring responsibilities for a disabled person) may have made specific adaptations to their home in order to cope with the disability.  In such a situation, the uncertainty with regard to their interest in the property may cause distress.

Similar consideration should be give for requests based upon caring responsibilities such as illness, old or young age or pregnancy where the uncertainty may lead to mental illness.

This discretion must only be exercised by the official receiver, as trustee, on a case by case basis.


31.3.204 Low value homes – interest in the form of a charge

Where the bankrupt’s interest in a family home is in the form of a charge to protect a future interest in the property (usually this will be in relation to matrimonial proceedings and the charge is placed on the home of a former spouse), the future interest will generally relate to the value of the property at a certain point in time e.g. the future age of a child (usually 18) or a date of re-marriage. The interest in the property is a deferred interest and where the value of the charged property is below £1,000, the official receiver should not consider this to be a low value property, as the relevant date for calculating the value will be the date that it is able to be realised, by which time it may be worth over £1,000.

The official receiver should follow the guidance in paragraph 31.3.278 when dealing with a charged interest.


[Back to Part 5 – Realisation of the insolvent’s interest in a property] [On to Part 7 – Dealing with property with leaseholders]