Housing Benefit Five Year Rule

Oldernotwiser

bigbill wrote: »

As Pension Credit is a passporting benefit to full HB & CTB (normally) it is not the previous capital that is causing the problem as HB cannot over rule the passport benefit.

It follows therefore that HB must be seeing it as either a contrived tenency or applying the 5 year rule, the option to rent somewhere else is available.

This sounds interesting as it sounds like some of us have given incorrect advice. Does this mean that any homeowner, approaching retirement, can sell their house, have a whale of a time for a couple of years on the proceeds and then settle down to claiming HB. Really?

(Not doubting yours and Macro's information but it sounds like a mile wide loophole!)

Eager_Elephant

Oldernotwiser wrote: »

This sounds interesting as it sounds like some of us have given incorrect advice. Does this mean that any homeowner, approaching retirement, can sell their house, have a whale of a time for a couple of years on the proceeds and then settle down to claiming HB. Really?

(Not doubting yours and Macro's information but it sounds like a mile wide loophole!)

Unfortunately this is quite a large loophole.

When I used to work for an LA the common thing to do was to apply for sheltered accomodation, once accepted sell house and have proceeds. No change to Pension Credit (Guarantee) as it is usually awarded in 5 year stints (to save admin time) and voila you have HB while you have 100k+ sitting in the bank.

EE

seven-day-weekend

Eager_Elephant wrote: »

Unfortunately this is quite a large loophole.

When I used to work for an LA the common thing to do was to apply for sheltered accomodation, once accepted sell house and have proceeds. No change to Pension Credit (Guarantee) as it is usually awarded in 5 year stints (to save admin time) and voila you have HB while you have 100k+ sitting in the bank.

EE

That is certainkly a loophole that needs closing.

It seems that the OP's relatives need only worry about the five year rule then. Unless it is turned down as being a contrived tenancy.

Wixie99

This is getting quite complicated, isn't it? It all started as a way to secure their son's inheritance (the father had much older children from a previous marriage), their idea of a good holiday is Spain with a few meals out instead of making sandwiches etc in the apartment. Now the little **** is several months behind with the mortgage, so if the house is repossessed, they will have to rent somewhere else anyway and problem solved.
Being a big softie, I find it all so very sad.
Thanks everyone for your input.

Whiteknight

I would wonder how much information they gave to the Pension Service when claiming Pension Credit regarding selling the home for a discount to the son and still living at the property. I would hope that the local authority would contact the Pension Service regarding the sale of the house and the deprivation.

I also hope your friends have informed Pension Credit that they are working!!

Wixie99

Yes, but they only do a few hours and it doesn't affect Pension Credit.

Wixie99

Hi folks, update on the above:

son has moved into his own house and they are renting a one-bed house. They are receiving some Housing Benefit and some Savings Credit.

Now son no longer has to pay inflated rent, he should (hopefully) start paying mortgate again.

Fingers crossed for them - they are lovely people.

ceecee1

Wixie99 wrote: »

Yes, but they only do a few hours and it doesn't affect Pension Credit.

A person can only earn £5 a week on pension credit - anything over this affects their benefit.........

It sounds to me as if they need to make sure that the payments of pension credit are correct.

andyandflo

Whiteknight wrote: »

I would wonder how much information they gave to the Pension Service when claiming Pension Credit regarding selling the home for a discount to the son and still living at the property. I would hope that the local authority would contact the Pension Service regarding the sale of the house and the deprivation.

I also hope your friends have informed Pension Credit that they are working!!

Yes I was comng to that point. Deprivation of capital is (1) the spending of what capital they did have - presumably the PC guys have looked into that angle and (2) the shortfall on the sale of the property - extra capital that they should have had if the property had been sold at the true market value.

I do doubt that Pension Credit have looked into this matter deep enough, or is it that they have been misled along the way! Personally, if I were the applicants, I would want clearance, in writing, from the Pension Service. As regards the working and it not affecting Pension Credit is totally untrue. ALL income concerns them, with an allowance of up to £5 pw being given before benefit is reduced. However, I also know that they pay PC on a fixed amount basis for anything from 6 months to 5 years - obviously it makes sense to ensure that capital and income is at it's lowest at the time of setting that level. Any changes after that date are ignored by the Pension Service as it would cost too much in admin to keep the amount up to date (unlike Income Support).

I do know that if the whole of the net proceeds of sale of one house is not fully used to buy the next property (and in my case they went back through 5 property transactions since the late 80's), then Mortgage Interest Relief is restricted to that mortgage that would have been needed to buy the house, instead of the mortgage actually taken out. There is no restriction or time limit (could investigate all property purchases made in a lifetime!)

Likewise, and in common with most Government Agencies, deemed capital is one that they could have had but chose not to receive.

If I had a £1 for every one of these contrived sales that I have investigated for the Official Receiver, I would now own a villa in the British Virgin Isles!!

Robbie64

Couples on Pension Credit have a standard £10 earnings disregard or £20 if Income Support was paid within 8 weeks of Pension Credit commencing and a £20 disregard applied. But yes, all earnings need to be declared as does any change in earnings regardless of the fact there may be an Assessed Income Period. Changes that do not need to be reported during an AIP are changes to things which can be described as "retirement income", which includes changes to pensions and savings but does not include earned income.