Changes to the legal aid rules have been laid in Parliament today that will allow more homeowners on low incomes to access legal aid. The rule change will particularly benefit survivors of domestic violence, with many more able to have legal representation in family proceedings, reducing the risk of being cross examined by their abusers in court.

The Government agreed to change the rules on ‘imaginary capital’ in response to a challenge brought by PLP on behalf of a domestic violence survivor and working mother of two who was denied legal aid for family proceedings. ‘Rebecca’ [not her real name] was told she was not eligible for legal aid because she owns her own home, even though there is almost no equity in the property.

Changes will come into effect in the New Year.

Rebecca’s solicitor Daniel Rourke, PLP, said: “Our justice system works best when everyone can use it on equal terms, with dignity and respect. A decision about whether someone can afford to pay for legal representation should not ignore the realities of their situation. It is plainly unfair to pretend someone has capital that simply does not exist.

“For victims of domestic violence, that has not been the case. The regulations laid today in Parliament will mean that many more vulnerable women on low incomes will be able to take part in family proceedings with the support of a lawyer, in a fairer and more equal way.

“Our client is earning a low wage, looks after two children and receives Universal Credit, yet she was denied legal aid because the rules on home ownership have not been updated in decades. They are completely out of touch with reality. This irrational rule ignored the fact that my client’s home was heavily mortgaged, and pretended that my client had capital which simply does not exist. The ‘imaginary capital’ prevented her from effectively participating in proceedings concerning her children.

“We are extremely grateful to the Law Society for protecting our client against costs in this case. Without their financial support and backing, it would not have been possible to bring this challenge, which has resulted in an important change in the rules.

“Our client has an upcoming hearing. We are keeping our fingers crossed that our client can obtain legal aid before the hearing takes place. If not, she may have to attend court without legal representation, where she would be expected to cross-examine her abusive ex-partner and make complicated legal arguments on her own.”

PLP’s client

Rebecca is a survivor of prolonged domestic violence from her ex-partner, including financial abuse and coercive control. Rebecca sought legal aid for private law family proceedings relating to her two young children when her ex-partner made an application to vary arrangements for their care.

Family law has not been in scope for legal aid since LASPO 2012, but an exception was preserved for survivors of domestic violence. Rebecca previously benefitted from legal aid and meets the income test as she receives Universal Credit. However, after purchasing a home to live in with her children Rebecca found she no longer passed the capital part of the means test.

Rebecca said: “Getting legal aid is essential. I absolutely need representation to go up against my ex-partner. I cannot bear the thought of being cross examined by him.I could not have gotten through the previous set of court hearings without legal representation. To have been put in this position would have been traumatic.

“When I found out that I wouldn’t be eligible for legal aid this time it sent me into a tailspin. I’ve had sleepless nights and constant anxiety.

“After years of turmoil, I have finally achieved some stability by buying a home for my children and myself, so the idea that I should have to sell it is awful. I would have to move the children to a new area and I still wouldn’t be able to afford legal representation as there is almost no equity in the home. 

“The justice system should be fair. Anyone facing an abusive ex-partner in court should have the support of legal representation. The alternative is unthinkable.”

Law Society of England and Wales president David Greene said:

“The Law Society is proud to have supported this challenge, which raises issues of huge importance for access to justice for the most vulnerable. There was a clear injustice in denying people legal aid on the grounds of mortgage debt. Nobody should be expected to sell their home and make themselves homeless in order to access justice. It is good news that the Ministry of Justice is addressing this immediately through legislation. 

“The issue of mortgage debt is just one of many flaws in the means test that we have been highlighting to ministers. Our research has shown the means test is preventing even families living below the poverty line from accessing legal aid. This must be dealt with in the present government’s review of the means test.  

“This case is part of a programme of work we have undertaken with the Public Law Project to improve access to justice. The Law Society engages in strategic litigation like this when a strong case promotes justice, where a judgment would provide clarity and have broad consequences beyond the individual case.” 

Family Lawyer Jenny Beck said:

“This is such an important decision and will have a wide impact on Access to Justice. About 1 in 5 women were denied legal aid to protect themselves and their families because of the application of the means test attributing to them capital which they couldn’t possibly access. This decision is a significant step towards better access to justice for them.”

Legal Aid rules

The rules[1] meant that only £100,000 of a mortgage debt can be considered when calculating the interest in a property. This artificially inflated the equity in Rebecca’s home by around £180,000, treating her as having disposable capital which simply does not exist, and taking her over the £8,000 capital limit.  This rule was applied even though there is very little equity in the home, which is mortgaged to around 95% of its value.

The £100,000 cap was introduced following a consultation in 1994 and has never been increased despite a five-fold hike in average house prices since that time. The result by 2020, is that the average homeowner is excluded from legal aid, regardless of their ability to afford to pay for legal representation[2].

Legal challenge

  • Rebecca brought judicial review proceedings challenging the Director of Legal Aid (DLAC’s) refusal to grant her legal aid and the lawfulness of the rules that had been applied to reach that decision.
  • The challenge was to the application of an absolute cap of £100,000 on the amount of any secured debt which may be disregarded when assessing the value of an interest in property.
  • PLP argued that the cap was arbitrary and irrational and that the rule was ultra vires and incompatible with Rebecca’s common law right of access to the court, as well as her rights under Art. 6 and 8 ECHR.


  • Following a grant of permission on the papers, the Director of Legal Aid Casework and the Lord Chancellor agreed to settle the case without going to trial.
  • As a result of Rebecca’s case, the Lord Chancellor undertook to amend the Means Regulations in order to remove the £100,000 cap on the mortgage disregard.
  • This result of this rule change will be that the full value of a person’s mortgage will now be deducted by the DLAC when assessing the value of their property.
  • The amending regulations will be laid on 18 December 2020 under the negative resolution procedure but will not come into force until 28 January 2021.

Relationship with the decision in GR v DLAC [2020] EWHC 3140 (Admin)

Where a low-income individual is applying for legal aid under the new rules, they will not be ruled ineligible by their home, if it is subject to a large mortgage.

In GR, where PLP also acted for a survivor of domestic violence, the High Court confirmed there is an important additional safeguard which may enable other low-income home.

Where a low income homeowner has been assessed as having capital in their home above the normal limits, but can demonstrate they are unable to access that capital, they can ask the Director of Legal Aid Casework to exercise discretion in their case and be treated as financially eligible.   

Are you an individual affected by these issues?

PLP are a small charity specialising in public law and unfortunately we do not have capacity  to advise on eligibility in individual cases, before an application for legal aid has been made.  A legal aid lawyer specialising in your legal issue (i.e. family) could assist to make an application for legal aid, who should be made aware of the judgment and the resources available on our website here. Details of family lawyers able to provide legal aid can be found on PLP’s signposting list or by using the search on the Ministry of Justice website.

[1] Regulation 37(2) of the Civil Legal Aid (Financial Resources and Payment for Services) Regulations 2013. £100,000 is the standard ‘mortgage disregard’ applied under Regulation 37(3)(b) of the Means Regulations, used despite the fact that RH’s mortgage is much larger. Importantly, if her full mortgage had been factored in RH would have been eligible for legal aid.

[2] The effect of the mortgage disregard, when combined with the equity disregard, a 3% allowance for costs of sale and the £8,000 capital limit was that any homeowner whose interest is valued at over £214,450 would be disqualified as a result of the capital threshold. The average house price in England in March 2020 purchased with a mortgage was £255,688 –