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Universal credit & equity
Comments
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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?
As an aside - tax credits are aware of the rental income aren't they?0 -
MissMoneypenny wrote: »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.
A "significant" change. What this means is anyone's guess, but I'd guess it includes stuff like splitting up, a child leaving eduction, maybe a new child born (though this would be silly if a new child stopped the claim!), but probably not eg a 5% payrise.0 -
A "significant" change. What this means is anyone's guess, but I'd guess it includes stuff like splitting up, a child leaving eduction, maybe a new child born (though this would be silly if a new child stopped the claim!), but probably not eg a 5% payrise.
Back to 5a again:-)
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.
Yes, it seems a "significant change" is not an increase in earnings:-)
c)
Subsequent decreases in Universal Credit award: if a claimant sees a fall in their Universal Credit award, maybe through an increase in their earnings, the amount of cash protection given at the point of transition will be unaffected, ensuring that work incentives are also protected.
Interesting to read that a change in circumstances seems to put the claimant straight onto UC (once they begin) and with no transtitonal protection.
2. Considerations
a)
The process of migrating claimants to Universal Credit will have an impact on transitional protection. Some claimants will move to the Universal Credit system naturally as circumstances in a current claim change. Other people will be moved over in a process managed by DWP. Transitional protection will only be applied in the latter circumstances and where the UC would otherwise be lower than total current award of benefit and tax credit.
AND
4. In practice, what does this mean for the level of protection?
a)
Protection is only provided where claimants have been ‘managed moved’.
RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
Read the sticky on the House Buying, Renting & Selling board.0 -
MissMoneypenny wrote: »Back to 5a again:-)
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.
Yes, it seems a "significant change" is not an increase in earnings:-)
c)
Subsequent decreases in Universal Credit award: if a claimant sees a fall in their Universal Credit award, maybe through an increase in their earnings, the amount of cash protection given at the point of transition will be unaffected, ensuring that work incentives are also protected.
Interesting to read that a change in circumstances seems to put the claimant straight onto UC (once they begin) and with no transtional protection.
2. Considerations
a)
The process of migrating claimants to Universal Credit will have an impact on transitional protection. Some claimants will move to the Universal Credit system naturally as circumstances in a current claim change. Other people will be moved over in a process managed by DWP. Transitional protection will only be applied in the latter circumstances and where the UC would otherwise be lower than total current award of benefit and tax credit.
AND
4. In practice, what does this mean for the level of protection?
a)
Protection is only provided where claimants have been ‘managed moved’.
Right. So as I understand it, at some point all new claims to tax credits, IS etc will be stopped and new claimants have to apply for UC.
Then any existing claimants who have "significant changes" after this will be moved to UC.
Then later everyone else will be "managed moved". At this point if someone has more than £16k capital, their UC award would be zero, but if they were getting say £7,000 in tax credits they'll get £7,000 transitional protection (ie difference between tax credits and UC).
The £7,000 will never go up. When a "significant change" occurs, they'll lose the whole lot.
That's what it seems to be saying, but it'll be a lot more complicated in reality...0 -
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.
They do with mortgages on a property. The mortgage is a charge against the asset and hence reduces the value.
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!
Erm, like the first bit, the second bit is just a guess too isn't it?
It's amazing how so many people are prepared to blatantly make up advice on rules that they have no knowledge of.
Whatever way you look at it, even taking it as 50:50 Value - 50:50 mortgage, that would leave supposed equity of £20k.
However they would (under present valuation rules, which may change)
allow 10% of the full asset price as selling costs, which would take off £10k from the OPs half share.
And all of that working is nice and interesting, but......
The OP cannot force the sale of the whole property. They can only force the sale of their half share.
So, what valuation would be given on a 50% share of a property, which if realised would most likely be used to clear the mortgage in full (or to as much extent as possible) before any cash is realised?
Zilch I'd say. :cool:0 -
So in my case I may or may not be protected?
If they don't start moving people over untill 2014 then can my sister "buy" the property from me for 100k so only just paying of the mortgage, then I will still be entitled to wtc & ctc? As long as the sale goes through in the next 2 years?0 -
Real1314: to prove all of what your saying to the dwp when the time came, would I have to go through solicitors etc to be able to still receive wtc & ctc?
Also how do they find out you own a 2nd property and how much the mortgage is and value?
Would my plan about my sister "buying" it from me work?
Thanks0 -
Erm, like the first bit, the second bit is just a guess too isn't it?
It's amazing how so many people are prepared to blatantly make up advice on rules that they have no knowledge of.
That's a bit uncalled for. zagfles has a good knowledge of tax credits and nobody really knows exactly what the changes will be in UC until the welfare bill is passed and the new booklet published.So, what valuation would be given on a 50% share of a property, which if realised would most likely be used to clear the mortgage in full (or to as much extent as possible) before any cash is realised?
Zilch I'd say. :cool:
That's your guess, but nobody knows yet.
One thing the government have made clear; those who have capital and investments in excess of 16k, will no longer be able to have income based welfare as they will be expected to use their capital to support themselves.RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
Read the sticky on the House Buying, Renting & Selling board.0 -
You need to read the HMRC rules on deduction of mortgage interest. Only the interest on the mortgage taken out to buy the investment property can be deducted against the rent received on the property. The OP has said that they inherited the property mortgaged the property for much more than her share is worth and spent the money. They never said the money was spent to buy the house or to make repairs or improvements to the property the HMRC will not allow that as a deduction and the full rent will count as income. No interest can be deducted. As that is now counted as income the universal credit will be reduced.Erm, like the first bit, the second bit is just a guess too isn't it?
It's amazing how so many people are prepared to blatantly make up advice on rules that they have no knowledge of.
Whatever way you look at it, even taking it as 50:50 Value - 50:50 mortgage, that would leave supposed equity of £20k.
However they would (under present valuation rules, which may change)
allow 10% of the full asset price as selling costs, which would take off £10k from the OPs half share.
And all of that working is nice and interesting, but......
The OP cannot force the sale of the whole property. They can only force the sale of their half share.
So, what valuation would be given on a 50% share of a property, which if realised would most likely be used to clear the mortgage in full (or to as much extent as possible) before any cash is realised?
Zilch I'd say. :cool::footie:
Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money. 0 -
Also how do they find out you own a 2nd property and how much the mortgage is and value?
Surely you have already told tax credits about the income from your rental and declared the income (even if it is 0) to the taxman?RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
Read the sticky on the House Buying, Renting & Selling board.0
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