Does this count as deprivation of capital?

Rachel_123

Looking to rent a new property, however the letting agency wont approve us paying monthly as we don't earn enough. I have the savings to pay it upfront for 12 months. If I pay this out (£8000) my savings will go below the £16000 figure and we may be entitled to a small amount of housing benefit. Would this count as deprivation of capital or would it be ok as I'm using the money for rent? Thanks

GlasweJen

You'd need to check with someone from your housing department. They'll want to know why you're paying 12 months upfront when it's standard to pay 6 upfront in your circumstances.

It is usually calculated that you have "credit" in your rent so if you pay 12 months now the LA will look at you having 11months worth of rent money available to you and wont pay LHA til your savings + the credit you have in your rent get to below £16,000.

Rachel_123

we had to agree to a 12 month tenancy as there was competition for the property and that was the only way we could rent it, thanks for the info

viktory

Rachel_123 wrote: »

Looking to rent a new property, however the letting agency wont approve us paying monthly as we don't earn enough. I have the savings to pay it upfront for 12 months. If I pay this out (£8000) my savings will go below the £16000 figure and we may be entitled to a small amount of housing benefit. Would this count as deprivation of capital or would it be ok as I'm using the money for rent? Thanks

Just for clarity- are you suggesting that you use your savings to pay your own rent and then claim LHA for the rent that you have already paid? If you have paid 12 months rent in advance why would need to claim LHA?

real1314

Rachel_123 wrote: »

Looking to rent a new property, however the letting agency wont approve us paying monthly as we don't earn enough. I have the savings to pay it upfront for 12 months. If I pay this out (£8000) my savings will go below the £16000 figure and we may be entitled to a small amount of housing benefit. Would this count as deprivation of capital or would it be ok as I'm using the money for rent? Thanks

Assuming you'd get the LHA I think they would have to treat it as deprivation as they would then be giving you the money back.

What they could do is assess a LHA award assuming the capital still existed, but allow the amount used to be reduced by the amount of your rent each month (£650?). It would then depend on how much capital you actually had to start with.

i.e if you had £17,500k and spent the £8k on rent, they would treat you as having the full £17,500 in month 1 (no LHA); then £16,850k in month 2 (so no LHA); then £16,200 in month 3 (no LHA); then £15,550 in month 4 - you'd get some LHA at this point, but would have £20 per week taken off for capital.

Jowo_2

Deprivation of capital is an extremely complex area and you may be better off seeking the advice of the local council, Citizens Advice or some other type of organisation who may know. Here's a link here to the Decision Making guide that the DWP use which may help provide guidance to you.

http://www.dwp.gov.uk/docs/hbgm-bw1-assessment-of-capital.pdf

Perhaps this is a pertinent section? Payments to third parties

A payment of capital made to a third party but intended for someone else, is subject to special
rules. The treatment of such a payment depends on whether it is made to or for a member of
the family, and how the payment is used. The term third party can include a public body, such

as an LA.

W1.951 Any payment made in respect of a member of the family, but paid to a third party outside the
family, should continue to be treated as part of the family’s capital if it is used to provide

• food
• ordinary clothing or footwear
• household fuel
• rent
• council tax, or

• water charges

HappyMJ

Prepaying rent is not deprivation of capital. However, my LA only considers 26 weeks in advance to be sufficient. They calculate entitlement on a weekly basis (which is very annoying as I'm self employed). Any deposits paid to acquire the tenancy would also not be counted as deprivation, they are usually for 1 month's rent and any fees paid to acquire a tenancy would also not be counted. Most of your original £8,000 would be disregarded and considered an expense essential to living.

sunnyone

viktory wrote: »

Just for clarity- are you suggesting that you use your savings to pay your own rent and then claim LHA for the rent that you have already paid? If you have paid 12 months rent in advance why would need to claim LHA?

because they are forced too, if you have under £16k in savings they come out and force you to apply, they will bring the forms and stand over you breaking a finger each time you refuse to pick up the pen while you explain you dont want it, you were forced to pay a years rent in advance and now you are building your savings back up because you dont have to pay rent in that year and you only went below £16k because of this.

paddedjohn

sunnyone wrote: »

because they are forced too, if you have under £16k in savings they come out and force you to apply, they will bring the forms and stand over you breaking a finger each time you refuse to pick up the pen while you explain you dont want it, you were forced to pay a years rent in advance and now you are building your savings back up because you dont have to pay rent in that year and you only went below £16k because of this.

MY THOUGHTS EXACTLY.
SOME PEOPLE MUST BE BROUGHT UP TO TAKE THE P*SS OUT OF THE REST OF US, £16K IN SAVINGS BUT THEY DONT WANT TO SPEND IT? :mad:

Jowo_2

Rachel_123 wrote: »

we had to agree to a 12 month tenancy as there was competition for the property and that was the only way we could rent it, thanks for the info

The risk of this approach is if the landlord defaults on the mortgage and the property gets repossessed before the end of the tenancy.

Can you offer a guarantor instead?

Is it also wise for you to rent a property when your income appears not to be sufficient to afford it and will simply burn through your savings?