Housing benefit with inheritance

racon

GirlFromMars wrote: »

There is of course a real world paradox at play here, in that you need quite a chunk of money these days to buy a property, so while you can do this with larger inheritances, people with an inheritance too small to purchase property will have no option but to live off it.

Hey, it is the same. Even if the inheritance is only £50,000 why could it not be possible to sell the house you currently live in for say £200,000 and buy a different one for £250,000. You are still able to 'lose' the capital to continue to get benefits.
As I say, this is a massive loophole if you are correct.
I would suggest that if the poster wants/needs/has to buy somewhere else, then, as you say, contact the council/DWP asking if it is acceptable in order to carry on getting benefits if they put the money into a property to live in instead of leaving it in the bank thus getting round the deprivation rules.

GirlFromMars_2

Err, yes, I'm sure. I have a letter from the DWP stating that my detailed plan of what I was doing to buy a property wasn't DoC. And an email from the LA Decision Maker stating that what I was doing wasn't DoC.

And once you've been told something isn't DoC by a Decision Maker they can't change their minds.

The rules are open to interpretation, so it is best to write to the DWP and get a written response from a Decision Maker about whether your specific circumstances would constitute DoC or not.

It is because the rules are open to interpretation that I suspect a DM would make a different decision if someone were planning on buying an unnecessary mansion.

But, for the purposes of means tested benefits, the home you live in is always disregarded.

It does seem to be overly cautious benefits advisers who are keen to spot all the loopholes & potential problems who think that buying a home is DoC. The actual DWP/LA decision makers have a more healthy attitude to people purchasing a home for themselves to live in. None of the DWP/LA Decision Makers I have spoken to about my situation were remotely fazed by my plans, yet the Benefit Adviser I spoke to was adamant that what I was doing was DoC.

So to reiterate, yes I am absolutely certain that what I did doesn't constitute DoC and I don't appreciate being accused of DoC given the lengths I went to to be certain that what I was doing was correct.

NYM

racon wrote: »

Hey, it is the same. Even if the inheritance is only £50,000 why could it not be possible to sell the house you currently live in for say £200,000 and buy a different one for £250,000. You are still able to 'lose' the capital to continue to get benefits.
As I say, this is a massive loophole if you are correct.
I would suggest that if the poster wants/needs/has to buy somewhere else, then, as you say, contact the council/DWP asking if it is acceptable in order to carry on getting benefits if they put the money into a property to live in instead of leaving it in the bank thus getting round the deprivation rules.

Hey, if they have a perfectly adequate property but choose to 'upgrade' then possibly it wouldn't be regarded as a reasonable and necessary expenditure and therefore 'deprivation of capital'...

Savingdad

Racon, in your quote it says it DoC if they buy the title of a property that is NOT going to be their residence or soon won't be.
In this instance the plan is to buy a property that WILL BE their main residence since they will have to sell their current home and will be homeles, that is also the difference between spending the 50k on buying a bigger place, if you dont need to spend it then its DoC, if you must use it to house yourself then its accepted and as such not consudered DoC I think.

GirlFromMars_2

savingdad wrote: »

Racon, in your quote it says it DoC if they buy the title of a property that is NOT going to be their residence or soon won't be.
In this instance the plan is to buy a property that WILL BE their main residence since they will have to sell their current home and will be homeles, that is also the difference between spending the 50k on buying a bigger place, if you dont need to spend it then its DoC, if you must use it to house yourself then its accepted and as such not consudered DoC I think.

I suspect the one they were referring to was this one...

"W1.714 The following are further examples of when a person may have deprived themselves of capital :

money has been converted into another form which would fall to be disregarded, for example personal possessions "

Which I believe could be interpreted to cover property you live in, if a DM decided they wanted to interpret it that way, but I believe is intended to cover expensive jewellery & fast cars instead.

This is the rule my benefit advisor cited as well.

ETA - the 26 week disregard for money intended to be used to purchase a property would be entirely redundant if the rule above applied to buying a property. As the money protected under this rule would always have been "converted to another form which would fall to be disregarded".

racon

savingdad wrote: »

Racon, in your quote it says it DoC if they buy the title of a property that is NOT going to be their residence or soon won't be.
In this instance the plan is to buy a property that WILL BE their main residence since they will have to sell their current home and will be homeles, that is also the difference between spending the 50k on buying a bigger place, if you dont need to spend it then its DoC, if you must use it to house yourself then its accepted and as such not consudered DoC I think.

Hey my quote is right, it is just the way it has come out. It should read:

• title deeds of a property, which is not the claimant’s home or will soon cease to be so
  because, for example, they will be moving elsewhere, have been transferred to someone else
• money has been put into a trust which cannot be revoked
• money has been converted into another form which would fall to be disregarded, for example personal possessions
• capital has been reduced by extravagant living, for example gambling, or used to provide
  a much higher standard of living than the claimant usually maintained

racon

savingdad wrote: »

Racon, in your quote it says it DoC if they buy the title of a property that is NOT going to be their residence or soon won't be.
In this instance the plan is to buy a property that WILL BE their main residence since they will have to sell their current home and will be homeles, that is also the difference between spending the 50k on buying a bigger place, if you dont need to spend it then its DoC, if you must use it to house yourself then its accepted and as such not consudered DoC I think.

Hey, I get that, but the argument that could be put up is that they live in a 3 bed house (£200,000) and need a bigger place for the family - 5 bed costing £450,000. That is reasonable, it is used all of the time. For a £50,000 inheritance you could say that they need a single storey property instead of a house which as we know costs more - £50,000 more.
Everybody will be homeless if they sell their home.
No one is homeless, the OP isn't, Girl from Mars wasn't (she was renting) and my two examples aren't either. Some are buying a bigger home for family reasons, some want to move from renting to home ownership.
Either way, it seems to me quite clear that if money has been converted into another form which would fall to be disregarded, for example personal possessions
Would fall to be DOC. How Girl on Mars managed to convince the DWP and the LA I have no idea. And as for the rules being unclear, they are clear to me.

Savingdad

racon wrote: »

Hey, I get that, but the argument that could be put up is that they live in a 3 bed house (£200,000) and need a bigger place for the family - 5 bed costing £450,000. That is reasonable, it is used all of the time. For a £50,000 inheritance you could say that they need a single storey property instead of a house which as we know costs more - £50,000 more.
Everybody will be homeless if they sell their home.
No one is homeless, the OP isn't, Girl from Mars wasn't (she was renting) and my two examples aren't either. Some are buying a bigger home for family reasons, some want to move from renting to home ownership.
Either way, it seems to me quite clear that if money has been converted into another form which would fall to be disregarded, for example personal possessions
Would fall to be DOC. How Girl on Mars managed to convince the DWP and the LA I have no idea. And as for the rules being unclear, they are clear to me.

This is about the OP brother who currentlt lives in the mothers house, the house has to be sold to pay inheritence tax so the brother will be homeless unless he can use his share if the inheritance to buy somewhere to live..

LadyIndigo01

Thank you everyone for your advice. What a complicated subject!
If I understand it correctly we can move my brother out (he is in agreement with this). He could either go on the Housing register or find a property to rent privately and then try to claim Housing Benefit.
When he receives his inheritance (which should be enough to buy a property) his HB will stop but we should ask DWP whether his ESA will stop if he does this? (His DLA is not means tested so shouldn't stop)?

racon

GirlFromMars wrote: »

I suspect the one they were referring to was this one...

"W1.714 The following are further examples of when a person may have deprived themselves of capital :

money has been converted into another form which would fall to be disregarded, for example personal possessions "

Which I believe could be interpreted to cover property you live in, if a DM decided they wanted to interpret it that way, but I believe is intended to cover expensive jewellery & fast cars instead.

This is the rule my benefit advisor cited as well.

ETA - the 26 week disregard for money intended to be used to purchase a property would be entirely redundant if the rule above applied to buying a property. As the money protected under this rule would always have been "converted to another form which would fall to be disregarded".

Hey, which leads back to what I was suggesting. It is one massive loophole.


So let's get this right, the beneficiary that I am talking about is to inherit just under £300,000. They (young couple + child aged 3, both out of work) live in a rented property. If they spent £294,000 on a nice detached property including legal etc fees, the DWP/LA would not wish to treat that money as capital held and that they could continue to live as they are on the same variety of benefits?
If however they kept the whole £300,000 in a bank account they would have all of their means tested benefits taken off them and be expected to live off the money for years to come?
That to me sounds like a huge con!
If that is true, people on means tested benefits that inherit or win money would need their heads examined if they didn't find a plausible reason to convert the capital into a fully paid up property.