Universal credit & equity

HappyMJ

Lotso wrote: »

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?

If the agreement is "on paper" as you say then your capital will be under the limit anyway. They can send a valuer if they don't believe your valuation. Assuming you currently have no equity then in a few years you could have more than £6,000 of equity so it would start affecting any claim once home prices start to recover again.

Lotso

Yes on paper the mortgage is 100% mine and in separate papers they state that half the property is hers, so in effect I have already had over my share. This was a good 6/7 years ago before I had children, would they then ask me what I had done with the money or is it none of their business since it was years ago before I claimed any tax credits?

HappyMJ

Lotso wrote: »

Yes on paper the mortgage is 100% mine and in separate papers they state that half the property is hers, so in effect I have already had over my share. This was a good 6/7 years ago before I had children, would they then ask me what I had done with the money or is it none of their business since it was years ago before I claimed any tax credits?

They would only ask if they suspect you got rid of the money to be entitled to claim benefits. If you remortaged 6/7 years ago you must have some equity in the property by now. According to nationwide house prices have increased a little bit since 2005. Have you paid any of the mortgage off? Just be careful it might only take a few percentage points of house price inflation for you to have in excess of £6,000 of equity. That £6,000 limit also includes any money you have in your current account.

Lotso

Basically I remortgaged for 100k the property is prob worth 140k but as the mortgage is all in my name and half the property is hers then anything left in it is hers? I.e the 40k equity is hers? Untill the property is worth 200k then I start having equity again? Is that correct?
If I remortgaged all that time ago and only started receiving tax credits 3 years later, now 7 years later surely it has nothing to do with them? You get people who used to be millionare's who now live in council houses etc.

zagfles

I'm not even sure they'll look at the equity, they might just look at the value of the property. They don't usually subtract loans from any assets you have.

And even if they did, if the mortgage is entirely yours against a property that is only half yours, they'll probably only count half the mortgage, as the other half is against the share you don't own!

real1314

HappyMJ wrote: »

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.

Are you able to provide a link to regulations regarding the bold section?

'cos it looks to me like you've just made it all up. :cool:

Incidentally OP, even a half share in a property can be sold. However the value would be affected. Similarly, any valuation of a property for benefit purposes would be affected to the same degree.

MissMoneypenny

HappyMJ wrote: »

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.

From zagfles link above:-

Transitional protection.

5. Further work
a)
We are working to define what exactly the significant changes of circumstance that end transitional protection will be. At the moment, we expect this might include situations such as starting or leaving work, or going over the capital limit. Of course, transitional protection will cease if entitlement to Universal Credit ends.


Does this mean that those who claim tax credits now but are over the 16k in capital, will not even get moved onto UC and their claim will end? If they aren't entitled to a UC award, then surely they won't get any transitional protection as they won't be moving onto UC?

zagfles

MissMoneypenny wrote: »

From zagfles link above:-

Transitional protection.

5. Further work
a)
We are working to define what exactly the significant changes of circumstance that end transitional protection will be. At the moment, we expect this might include situations such as starting or leaving work, or going over the capital limit. Of course, transitional protection will cease if entitlement to Universal Credit ends.


Does this mean that those who claim tax credits now but are over the 16k in capital, will not even get moved onto UC and their claim will end? If they aren't entitled to a UC award, then how can they get any transitional protection from moving onto UC?

No. In document 3 it says

People with capital of £16,000 or more who are entitled to Tax Credits before migrating to Universal Credit will receive transitional protection to protect their cash income.

Lotso

I don't understand I thought it was capital they looked at for benefits which was equity in property not the value? So if the property is worth 140k they would see me as having 70k!!
And same question as missmoneypenny :-)

MissMoneypenny

zagfles wrote: »

No. In document 3 it says

So from reading that and the quote I gave, they might not be on UC for long, as a change will just end their claim. No time period is given for those with capital over 16k now.