Universal credit & equity

Lotso

Hi everyone,

I know this is a couple of years off as their not transferring existing claimants untill 2014-2017 but I'm worried!
I am a single mum to 2 currently working and reviving ctc and wtc and child benefit. However, I own 2 properties both in joint names. I know that the property I live in does not count towards capital but the 2nd property will and they will take equity into account in universal credit. As it is jointly owned the equity in it is 50/50 but I may still have over 16k in it, so their for I will I not receive any wtc/ctc? I rely heavily on this money, and I'm unsure as to how having capital in a property means I have money. It's not as if it's in the bank and I can use it to live on?
Their is also a part that states you won't be worse off, but how long will that be gauranteed for?

Thanks

HappyMJ

Lotso wrote: »

Hi everyone,

I know this is a couple of years off as their not transferring existing claimants untill 2014-2017 but I'm worried!
I am a single mum to 2 currently working and reviving ctc and wtc and child benefit. However, I own 2 properties both in joint names. I know that the property I live in does not count towards capital but the 2nd property will and they will take equity into account in universal credit. As it is jointly owned the equity in it is 50/50 but I may still have over 16k in it, so their for I will I not receive any wtc/ctc? I rely heavily on this money, and I'm unsure as to how having capital in a property means I have money. It's not as if it's in the bank and I can use it to live on?
Their is also a part that states you won't be worse off, but how long will that be gauranteed for?

Thanks

Equity in property that you own but do not live in will count but certain exemptions apply. The transition period is about 6 years or a change of circumstances if earlier.

p00hsticks

Lotso wrote: »

I'm unsure as to how having capital in a property means I have money. It's not as if it's in the bank and I can use it to live on?

I susect the thinking is that you could sell it to raise money, or rent it out in order to provide an income ?

Lotso

The property is buy to let so is already rented out and the rent covers the mortgage (intrest only) but it is jointly owned so I can't just decide to sell it myself. Under current rules I am fine but under universal credit I have to sell up?

HappyMJ

Lotso wrote: »

The property is buy to let so is already rented out and the rent covers the mortgage (intrest only) but it is jointly owned so I can't just decide to sell it myself. Under current rules I am fine but under universal credit I have to sell up?

If the rent is only just covering the interest on the mortgage either your mortgage interest rate is very high, you aren't charging enough rent or you are in negative equity. The benefits system will expect you to not pay the mortgage debt and use the rent money that you receive to pay your day to day living expenses. This will cause the mortgage to go into arrears and further action will be taken such as selling. Can you sell your share to the other joint owner? Is the other joint owner related to you? You may have an exemption if it's a family member occupying the property rent free such as an ex-partner and children.

Lotso

The property was inherited by myself & sister a long time ago, we then re-mortgaged the property so that's why their is equity still in it even with an intrest only mortgage. She does not live their, a tenant does. I understand completely that if I was getting housing benefit or council tax benefit that I would not be entitled to anything but think it's unfair to make such a big change with regards to wtc & ctc. Is this definately going ahead?

zagfles

Lotso wrote: »

The property was inherited by myself & sister a long time ago, we then re-mortgaged the property so that's why their is equity still in it even with an intrest only mortgage. She does not live their, a tenant does. I understand completely that if I was getting housing benefit or council tax benefit that I would not be entitled to anything but think it's unfair to make such a big change with regards to wtc & ctc. Is this definately going ahead?

Almost certainly, though the details are far from finalised. I very much doubt they'll backtrack on the capital rules though.

Not sure where HappyMJ gets the 6 years transition from though - I thought it was basically forever until a "major change" of circumstances. Which everyone will have eventually eg a child leaving education.

Lotso

So do you mean that my current level of wtc & ctc at that point will be protected indefinitely untill a "major change" regardless of having equity in a 2nd property? Is a change in work hours or nursery provider etc classed as a major change?

zagfles

Lotso wrote: »

So do you mean that my current level of wtc & ctc at that point will be protected indefinitely untill a "major change" regardless of having equity in a 2nd property? Is a change in work hours or nursery provider etc classed as a major change?

They haven't defined what a "major change" is yet. See below, documents 3 & 6:

http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-key-documents/welfare-reform-bill-2011/universal-credit-briefing/

HappyMJ

Lotso wrote: »

So do you mean that my current level of wtc & ctc at that point will be protected indefinitely untill a "major change" regardless of having equity in a 2nd property? Is a change in work hours or nursery provider etc classed as a major change?

They haven't defined it as yet but as a guidline it's written in one of the proposal documents that starting or leaving a job or an increase in your capital would constitute a change. As you own a home I would expect your capital would increase at some point.

Lotso

How do they work out your capital then, will they send someone out to value everyone's homes who have a 2nd property then ask what the mortgage balance is etc?
When we re-mortgaged it was done in solely my name but it is jointly owned, so their for on paper any equity left in the property would be hers?