Universal Credit and property on rent

aliasojo

princessdon wrote: »

At the moment it's not. As I said I could lower our salaries to £17000 pa, get over £900 a month in benefits, keep over £100k in savings, and wages of approx £1300 pm (very little deductions) and have the state pay 40% towards our pensions. So if we put £4000 pm into a pension the state would in effect pay £1000pm of that. Plus our other homes.

Crazy, but above board and many like OP take advantage. Universal credit is starting to address this, but not fully as pensions still allowed,

This is just another example of why many people feel annoyed these days.

It seems yet another sign that those who 'have' can still have and receive help, yet the rest of us get cuts right left and centre. Iyswim.

Don't get me wrong, I don't blame anyone for doing all they can to look out for themselves as long as it's within the law. The Governments tactics have encouraged a breakdown in society and it's all about oneself now. You either jump onboard or get trodden on.

BigAunty

atlantis187 wrote: »

How much are u allowed to put into your pension through work?
Do pension payments have to be declared for universal credits?

Even if you could legitimately put your excess savings and income into a pension scheme in order to continue claiming the £100 per week child tax credits (rather than have your wife rerturn back to employment), this will not address the fact that you will still not be entitled to a penny in Universal Credit once the transitionary protection period has passed because of the equity in your investment property.

You'd need to move back in and hence use your own income to pay down the mortgage instead of enjoying a tenant pay towards your investment while the public purse provides you with money to bring up your children, top up your savings and speed you towards a mortgage free state.

It is worth double checking the position on how paying towards a pension is treated under UC as it may have changed since this policy doc

"In calculating the amount of earnings to be taken into account in Universal Credit, 50 per cent of contributions to an occupational or personal pension will be disregarded, as now under Income Support."

www.dwp.gov.uk/docs/universal-credit-chapter6.pdf

Pappapig

I'm a newbee so please excuse me if i'm invading your forum. I'm self employed, single with two children. The child's father passed away so i no extra support. i pay my own council tax, my own mortgage. I have never ever claimed council tax benefit or asked for my interest part of my mortgage to paid. Neither have i ever claimed IS or JSA.

I have always funded myself through being employed since having children I decided to take up P/T self employment rather then being employed in order to be able to work from home giving me the freedom to look after my 9 month old baby (saving the government more money).

My 2 year old boy goes to nursery and his fees are mainly funded through the child care element of WTC. If i did not get this 70% child care assistance through the current tax credit system, then working with the responsible would not be an option for me. Being eligible for the child care element under the current scheme is a lifeline for many people like me as it means i can work.

When UC kicks, there are going to massive problem.

I have rental property which I purchased when i was young in which i have placed tenants. The property is worth £200k but there is a mortgage outstanding on it for £150. There is a binding Deed of Trust in place which states that if the property is sold then £40,000 is to be repaid back to my uncle who gave me £40,000 at the time for the deposit when i purchased the property.

If i sold the property today, i'd only end up with £10,000 profit after the £150k mortgage and £40k debt has been paid back.

I'm not making a profit from the rent as the rent covers the interest only mortgage, ground rent, service charges and other expenses that i can't avoid. I'd love to be able to make income from my second home but can't! Since CTC and WTC is currently an income based benefit, the fact that i have second property does not affect me in anyway.

I understand that under UC everything will be means tested and any equity in property over £16,000 will mean that you will automatically not be entitled to UC. Is this true?

Another question, based on my figures above, will it be seen that that I have £50,000 equity in my second home or £10,000? In order words, will the debt of £40k secured via Deed of Trust be treated in the same way as a mortgage debt?

I'm really worried that i will be forced to dispose of my second home since holding on to it is nothing but a liability. I was hoping to hang on to it as a pension pot for me for the future again saving the government more money!

If i hang on to my second home, then my guess is that my WTC/CTC will stop. Am i correct? Okay let's say this happens, that i will get a full time job which is fine. I have the capacity to early around £1,000 to £1,200 a month full time with my current skill set. The problem is full time child care for two children whilst I got to work will cost a minimum £1,000. How the hell can i support my family and I on £200 and the small amount of money i get in child benefit????

I anyone can advise i'd really appreciate it. Am i reading the universal credit thing wrong or is the reality? I can't seem to find the answers anywhere. I just don't know what to do and am going sick with worry.

BigAunty

I can't answer your specific question but to be honest, it's not much of an investment unless you can pay down the capital sum and it doesn't sound like you are able to do this in the near future.

Are you sleep-walking into the type of repossession or sudden fire sales we see on the housing forum whereby banks will not extend mortgage terms to owners who have no feasible way of paying off the balance closer to the end of the mortgage term? We see people on the forum who have been on IO mortgages for 10-20 years, sometimes with remortgages, who actually owe more than they borrowed and have very limited time to come up with the huge balance and no means to do so. They've often assumed that house price inflation will fix the issue or that the mortgage lender will grant them another 10-15 years on the term (and they won't...).

With property price inflation, even if that deed is accepted and reduces the equity in the property, you may find you reach the capital limit in the near future anyway.

Hopefully someone will be able to answer your specific question but you need to think how you can be a true owner-occupier paying off your mortgage on a repayment basis, sooner rather than later. People who can't afford property generally sell up and live in rented accommodation - that's a legit option.

letthemeatcake

princessdon wrote: »

I agree, because I have no real housing costs, and little childcare costs I could hypothetically pay most of our salaries into our pension. Reclaim CB, gain large tax credits (4 children currently) whilst getting a large pension pot thanks to the government. Because someone can do this, doesn't make it right.

People who can afford to pay, should, to avoid responsibility is unfair to others.

But surely if someone paid a large amount into a pension prior to claiming benefits that could be seen as a deliberate attempt to get rid of savings in order to claim benefits?

BigAunty

letthemeatcake wrote: »

But surely if someone paid a large amount into a pension prior to claiming benefits that could be seen as a deliberate attempt to get rid of savings in order to claim benefits?

Deprivation of capital is a very complex area and every case is reviewed on a case by case basis, there's no simple checklist to guide a benefit claimant. Remember it's all about the DWP or HMRC or local council having to prove the intentional nature of the act, that it's deliberate.

However, I have never seen any official documentation that says paying into a pension is automatically deprivation of capital, unlike the DWP decision makers guide (staff manual) that sees gifts or transfers of money/property to relatives by the benefit claimant as an area that could prove DoC.

I recall a case where someone of mature age who successfully appealed DoC after they paid off a lump sum from their mortgage using their redundancy money. DWP or similar organisation said it was DoC, the judge said it was something sensible to do given their age and circumstances.

charlieismydarling

There seems to be soo many petty and small minded people on this forum. A lot of jealousy goes on around here just because someone is a little well off than u. U don't need to drop snidy comments

Why should I not claim everything I can I have been working for last 12 years paying into this stupid system

Generally I am for the benefits system but this is rich! Twelve years is nothing really. You do well from this "stupid" system. Tax credits, DLA, carers allowance and god knows what else. Savings that you hide in your children's accounts.

You are lucky to be able to live rent free and receive this money from the system! Try being grateful and stop trying to fleece the system. Oh, and stop talking in text speak it is juvenile and irritataing.

princessdon

letthemeatcake wrote: »

But surely if someone paid a large amount into a pension prior to claiming benefits that could be seen as a deliberate attempt to get rid of savings in order to claim benefits?

My quote was a reply to tax avoidance and until universal credit kicks in there is no minimum savings for Tax credits (just interest over £300 is treat as income), and no for tax credits pensions are deductible and putting into a pension is not seen as depravation.

Upon first claiming a lump sum may be treat so (not sure), but regular donations simply reduce the declared salary. Crazy yes but it's the way it is right now.

letthemeatcake

My post wasn't directed at you personally Princessdon which is why I asked 'if someone'.
I received a lump sum recently and had hoped to add to my pension but then decided it would probably be seen as DOC (for CTB). It seems to be a grey area.