Savers with children, will Universal Credit force you to buy a house?

Orpheo

Considering that there will be a capital rule of no more than £16000 applied to the child element of Universal Credit (replacing tax credits), could this force savers into buying houses? When these changes happen, for us, buying a house, as opposed to holding savings, will be subsidised to the tune of £100 per month which we will otherwise lose.

I wonder if "homeowners'" houses will be considered as capital?

abaxas

Orpheo wrote: »

Considering that there will be a capital rule of no more than £16000 applied to the child element of Universal Credit (replacing tax credits), could this force savers into buying houses? When these changes happen, for us, buying a house, as opposed to holding savings, will be subsidised to the tune of £100 per month which we will otherwise lose.

I wonder if "homeowners" houses will be considered as capital?

They should be.

inspector_monkfish

You been playing that 'make your own Daily Mail headline' game ??

Orpheo

inspector_monkfish wrote: »

You been playing that 'make your own Daily Mail headline' game ??

No. It was a serious post based upon my reading of the white paper. Can't stand the Daily Fail.

abaxas

I quite like the Mail.

Just put your hate filter on max and have a laugh at them.

tyllwyd

My gut feeling is that although it would be unfair, it would affect relatively few families, because the child element will be withdrawn quite steeply for middle/higher income families. So you'd need to be on a fairly low income but with fairly high cash savings to be losing a significant amount of money in tax credits.

inspector_monkfish

Orpheo wrote: »

No. It was a serious post based upon my reading of the white paper. Can't stand the Daily Fail.

Sorry Judith......

Orpheo

tyllwyd wrote: »

My gut feeling is that although it would be unfair, it would affect relatively few families, because the child element will be withdrawn quite steeply for middle/higher income families. So you'd need to be on a fairly low income but with fairly high cash savings to be losing a significant amount of money in tax credits.

We are average income, with significant savings, but stand to lose £100 a month unless we move to buy a house. To be honest I would have no problem with the principle of losing it were it not for the fact that we wouldn't lose it if we bought a house. Seems half-arsed. Better buy soon lest I'm accused of deprivation of capital. There are going to be a lot of surprises for those who haven't bothered to read the proposals.

michaels

Life is so complicated - I make a tidy sum on the spread between my mortgage rate and the interest I earn on the same sum 'offset' elsewhere. currently don't qualify for tax credits but may do so next year.

Luckily my mortgage is fully flexible so may be I will have to pay it down and zero my savings on the day I sign the 'I have less than 16k' declaration and then redraw and restooze the following day. This is still far from ideal with a lot of the cash in isas and high paying fixed rate accounts that can not be replenished after withdrawals

LydiaJ

That's an interesting point, Orpheo. (Well, it was interesting to me, anyway.)

There's no need to rush into buying a house until you're ready, though. Buy when it's the right time for you in other respects and don't worry about the universal credit implications. For one thing, existing claimants aren't going to be transferred to the new system until after April 2014:

A provisional timetable has been developed with a view to completing the transfer to Universal Credit by October 2017:
October 2013 to April 2014
All new claims for out-of-work support are treated as claims to Universal Credit. No new Jobseeker’s Allowance, Employment and Support Allowance, Income Support and Housing Benefit claims will be accepted. Customers transitioning from out-of-work benefits into work will move onto Universal Credit if they are eligible.
April 2014
No new claims are made to Tax Credits.
April 2014 to October 2017
During this time we would begin to work through existing cases.

And even if you are still claiming when you get transferred, you won't lose:

When introduced, Universal Credit will initially apply to new claims. It will be phased in for existing benefit and Tax Credit recipients. There will be no cash losers at the point of change, ensuring that no one will see their benefits reduced when Universal Credit is introduced.

Orpheo

I wasn't really worried. Interesting facts though LydiaJ, thanks.