Dear Ministry of Social Development,

I would like to know how does MSD calculate equity for (benefit entitlement purposes) in the following situation?

A mother of 3 young children has separated from husband who are both co-owners of 3 residential properties. The mother has primary responsibility of the children and so live with her. The mother is unemployed and cannot afford to buy food for her family and so requires food support every week since may. Each of the parents live in two of the properties separately(as their homes), leaving the 3rd property a rental property(operating at a loss ie rental income doesn't cover the mortgage repayments).

The mother has applied for the following benefits Temporary Additional Support and Accomoadation Supplement but due to the co-ownership of the properties she has been denied any further entitlements including food support for her children(ranging in age from 2 years old to 11 years old).

By selling the rental property(or any of the properties) will result in the mother being either homeless and/or liable for additional significant mortgage repayments(due to her co-ownership of all properties) increasing her hardship.

I understand that because the 3rd property is a rental property MSD would need to look at this property/income for the purposes of benefit entitlements and so equity(asset value) would be considered by MSD for this property only.

This matter has arisen due to the unexpected change in circumstances ie husband and wife have separated.

1. Can MSD confirm which formula they would use to calculate equity?

Equity = Capital value - mortgage owing.

Equity in a rental property is based on the Capital Value(which already includes land value) ie Capital Value = Land value + home improvements

Or would MSD use the following calculation
Equity = Capital value + Land value - mortgage owing?

Keeping in mind that 3 external industry experts agree with the first calculation that Capital value already includes land value and so should not be added a second time.

The 3 external parties are Horowhenua District Council, a registered Mortgage Broker and registered property valuer.

2 In this situation, how many of the properties would MSD consider equity in (in terms of asset value) to determine benefit entitlements for the mother?

Would it be the properties not being lived in by either of the parents or the properties not being lived in by the mother?

3. They may not be legally required to but would it be reasonable to expect MSD to contact the industry experts above before making their decision?

Yours faithfully,

D Dahya