Housing benefit with inheritance

racon

savingdad wrote: »

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..

Hey, you do know that the administrator/executor can borrow the money to pay the Inheritance Tax. Additionally, HMRC I believe don't need to have the tax paid in full in cases like this.

racon

LadyIndigo01 wrote: »

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)?

Hey, that seems to be the gist of it. but to be honest I wouldn't be doing anything until the DWP confirm that he can use his capital to get round the deprivation rules, by buying a house. There doesn't seem to be a limit on the amount you buy one for either. Depending on the value of the inheritance, he could be able to buy a country pile with 400 acres!!
All of that seems a bit fishy to me, and can't see the DWP/LA going along with it.


Seems that we have written a new rule - how to keep getting means tested benefits - buy a house only leaving £6000 in the bank account.

Savingdad

Thats about the sum of it racon, of course your couple with a child would no longer be entitled to any housing benefit as they now own a property and would probably have to satisfy that needed a 294 k house, up north that may be difficult but London should he easy enough, once they have satisfied the powers that be the 300k could be left in a solicitors bank account to fund the house purchase and that can carry on claimimg their means tested benefit .

GirlFromMars_2

racon wrote: »

No one is homeless, the OP isn't, Girl from Mars wasn't (she was renting) and my two examples aren't either.

Don't use me as an example if you can't be bothered to read back and find out my actual circumstances. I definitely wasn't renting.

In my case I didn't need to buy a property at all to receive full IR benefits. According to the capital rules I could have let my brother live in our house rent free & I would have been entitled to full HB/LHA and IR ESA anyway as the home I didn't live in was disregarded. Something I didn't know till I had to research DoC to see if I could buy a property.

LadyIndigo01

Well I am quite surprised. I thought that when he inherited all his means tested benefits would stop as he would have over 16k. I assumed that if that 16k was tied up in a property he was living in he would still not receive means tested benefits and once he had spent any spare cash he would have to sell the house and use this money to rent. I assumed that once he had spent all the money on rent/food/bills etc if he gets down to <16k he would be able to claim again. That seems to be more logical....

GirlFromMars_2

LadyIndigo01 wrote: »

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)?

Before moving your brother out of the house make sure he writes to the DWP/LA explaining what he plans to do and check he won't be depriving himself of capital by buying a house. It's worth checking both circumstances, the first where he moves into rented accommodation then inherits, and the second where you allow him to remain in his home and inherits.

The rules are open to interpretation (as you can see from racoon's posts!) and it is best to get written advice from the DWP before he does something that may be classed as Deprivation of Capital.

GirlFromMars_2

racon wrote: »

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.

That's why it's not up to you to decide. Get them to write to the DWP and explain their circumstances and what they are planning to do and why they need to buy a £300K house (can they afford the upkeep on a £300K house?) Then a Decision Maker can decide.

I honestly don't believe the rule you are citing above refers to property that you live in, but if you can get clarification on that matter you'd save a lot of people a lot of trouble from benefit advisers assuming it does.

GirlFromMars_2

LadyIndigo01 wrote: »

Well I am quite surprised. I thought that when he inherited all his means tested benefits would stop as he would have over 16k. I assumed that if that 16k was tied up in a property he was living in he would still not receive means tested benefits and once he had spent any spare cash he would have to sell the house and use this money to rent. I assumed that once he had spent all the money on rent/food/bills etc if he gets down to <16k he would be able to claim again. That seems to be more logical....

No, otherwise all home owners out of work/incapacitated would be forced to sell their homes to live.

The home you live in is disregarded for capital purposes.

Please get advice from a DWP/LA decision maker for your brother before you decide what he should do.

But the theory is that he should be able to purchase a property to live in and still be entitled to IR benefits (if his remaining capital is under the capital limits). Please remember if he owns his own home he will need money for repairs & maintenance of the home.

racon

LadyIndigo01 wrote: »

Well I am quite surprised. I thought that when he inherited all his means tested benefits would stop as he would have over 16k. I assumed that if that 16k was tied up in a property he was living in he would still not receive means tested benefits and once he had spent any spare cash he would have to sell the house and use this money to rent. I assumed that once he had spent all the money on rent/food/bills etc if he gets down to <16k he would be able to claim again. That seems to be more logical....

Hey to me too!!
The system seems to be geared to using home purchase as a way of getting around the deprivation rules.
You could even use the system it appears, to buy into a property for say 25% of it's value and still get Housing Benefit on the remaining 75% that you are renting!! Seems a right old scam!

racon

GirlFromMars wrote: »

That's why it's not up to you to decide. Get them to write to the DWP and explain their circumstances and what they are planning to do and why they need to buy a £300K house (can they afford the upkeep on a £300K house?) Then a Decision Maker can decide.

I honestly don't believe the rule you are citing above refers to property that you live in, but if you can get clarification on that matter you'd save a lot of people a lot of trouble from benefit advisers assuming it does.

Hey, I know it's not up to me, if it was I would close it down! Given what you have said they might as well buy the best home in the best area. No point in buying the same house in a poor area and having money in the bank then losing their benefits. I'm only talking about a nice, modern (3 year old) 3 bed detached, but because where it is situate there is a premium to pay on top. Modern/new houses are relatively easy and cheap to maintain.
I suppose they could say that they need the extra bedroom for another child that they might be planning, or that he might need the extra bedroom to use as an office as he is hoping to start self employment in the future working from home.


How would I get the definitive answer? Would it be a scenario to the DWP - what if sort of thing under the FOI?