Proceeds of house sale ...

MDJO_2

Hi
My sister, who is on a very low income of £150 pw is considering selling her 2 bed terrace and moving into rented accomodation so she can realise the equity in her home and clear some debts. After existing mortgage and debts are cleared there is likely to be c£40k left over. Typical rents in the area are £500-£600 per month for anything habitable, which obviously she cannot afford on her income (she has a son who has just left school and is at college who gets £30 pw). She believes she may be entitled to some form of financial assistance through benefits however does the £40k from the housesale become part of the 'means test' - if so, are there any loopholes she can take advantage of ? For example, would she be able to 'loan' the money to myself ?
Many Thanks in advance.

seven-day-weekend

She will not be entitled to any Housing Benefit or Council Tax Benefit if her savings/capital is more than £16k and the proceeds from her house will be counted as this.

If she 'disposes' of the capital in the way you describe, it will be classed as deliberate deprivation of capital and she will still not be able to claim the above benefits.

She will be expected to pay the rent herself until her capital is below £16,000.

Also be aware that even if she were eligible for Housing Benefit, they may not be prepared to pay all of the rent.

Could she rent out a room in her house to generate more income? You can earn up to about £4000 a year without having to pay tax on it. I appreciate it is only a two-bedroom, but if her terrace house is anything like mine, she may have a rooom downstairs that could be used as a bedroom?

Also, is she claiming Council Tax Benefit now?

Just a thought.

http://www.adviceguide.org.uk/index/life/benefits/help_with_your_rent_-_housing_benefit.htm

Your income and capital


To get Housing Benefit, you must have income and capital below a certain level. Capital means savings, land, property or anything else which could provide you with income. If you have more than £16,000 in capital you will not get any Housing Benefit (unless you are on Pension Credit, see below). If you have capital of over £6,000 then you will be assumed to have some income from that capital (but see below if you get Pension Credit).



If you are getting Income Support or income-based Jobseeker’s Allowance you will automatically be within the income and capital limits for Housing Benefit and you will qualify for the maximum amount. If you are on Pension Credit and you get the guarantee credit (whether on its own or with the savings credit), you will also automatically get the maximum amount of Housing Benefit. If you get the savings credit only, you may qualify for Housing Benefit but it will depend on your income and savings. The local authority (the Housing Executive in Northern Ireland) will use the Pension Service figures for income and savings to assess whether you can get Housing Benefit.