Pensions & Pensions Credit

hellokitty08

My nan is 74, we are looking in to her selling her house for £100,000 and buying a shared ownership retierment flat for £66,000.

She current recieves £80 a week state pension, £7 a week private pension, and £44 a week pension credits.

If she moves she will have appox £30k left to in the bank to enjoy herself with, but will incure an £80 a week service charge.

She has no savings at all right now and no other income.

The pension credit calculator on direct.gov says she would get £106 a week pension credit if she has the service charge to pay and £30k in the bank, but she doesnt think this would be true.

Can anyone advise?

sleepless_saver

hellokitty08 wrote: »

but will incure an £80 a week service charge.

?

£80 a week? Is that right?

Loughton_Monkey

sleepless_saver wrote: »

£80 a week? Is that right?

Sounds like a bit of a rip off.

hellokitty08

Yerh im sure thats what they said, that includes the rent on the other part thats not owed, insurance and the maintenance charge.

Mojisola

hellokitty08 wrote: »

My nan is 74, we are looking in to her selling her house for £100,000 and buying a shared ownership retierment flat for £66,000.

She current recieves £80 a week state pension, £7 a week private pension, and £44 a week pension credits.

If she moves she will have appox £30k left to in the bank to enjoy herself with, but will incure an £80 a week service charge.

I just wouldn't buy in that case - that's all her state pension gone and the service charge is bound to go up and up.

lvader

Jut to be clear the service change is for the retirement home. The way it was written it almost sounded like it was for keeping the £30k in the bank!

Depending on what they do for the £80 it sounds like a bargain.

Make sure the £30K doesn't effect the pension credit payments.

CLAPTON

£80 per week is 4,160 per annum

your nan is only 74 ; she may well live for another 20-25 years
how ever will she pay £,160 (and rising yearly probably above inflation) for that time?

sleepless_saver

So, it's shared ownership and the £80 is rent plus service charge, not just service charge. She is moving from having no mortgage or rent to having rent to pay.

The pension credit should cover this. There is no capital limit for pension credit and she would be assumed to get about £40 a week income from her £30k. That would be added on to her other income and used to assess the pension credit. She would get about £100 per week in pension credit assuming they are happy that she has incurred additional housing costs (don't know what the rules are on this). Who would she be renting from as that would also make a difference.

There are major changes to the whole welfare system underway. The rules may change in the future in ways which would disqualify her from the full amount of financial support she would need to be able to live there though she could of course use her £30k to live on.

Even under the present system, with the assumed income from the £30k capital on top of her other income she must be near the pension credit threshhold. If state pension increased to take her above the PC threshhold she would lose the pension credit entitlement and the accompanying full council tax benefit. She would then spend some of her capital on living costs until she became entitled again.

Finally, there are a lot of posts in the forums from people who have run into serious problems with shared ownership. If the only reason for moving is to release some equity and her existing house is OK otherwise, has she considered equity release (now a better bet than it used to be).

hellokitty08

Ok this is a bit confusing, but with the caculator on direct.gov her current payments are correct. When you add the £30k savings and the £80 a week service charge, her pension credit goes up to £106.

I assume this is because of the £80 service charge. In effect this means she get extra pension credit to help pay for this, so overall would only be £20 a week worse off, but would have the benefit of being on the ground floor, when she currently has stairs, and some money in the bank to enjoy.

The reason to relocate is to downsize to a more accessible property and for her to be more comfortable. Its a housing association and she would probably stay there for the rest of her life. Bless her. Its a retirement flat not a residential home.

sleepless_saver

That all makes sense. Note that not all service charges are covered by benefits, it depends on exactly what they are for. The rent part of the £80 would definitely be covered.

hellokitty08

Thanks, its nice to have someone else to look at these things with me. Everyone else in my family is a little bit floaty, so they come to me for these types of things. Its good to be able to double check my research.