Deprivation of capital?

selhurst_sound

I've recently separated from my partner (unmarried) and we are currently still both living in the house we jointly own and mortgaged with our six year old.

I'm trying to establish our options but am concerned our current preferred way forward may be determined to be deprivation of capital.

OH is happy to transfer title on the property to me, although I know I will need to reduce the mortgage by £10k in order to make the lender comfortable with transferring the mortgage to my sole name - but it's financially possible. She doesn't want anything for transferring her share - we bought our first property through an equity loan scheme, only having to put a small amount up ourselves, which I paid 100% of, and her household contribution per month equates to about 15% of household costs (mortgage, bills, living, etc).

She would then be mortgage free and potentially able to claim state support (our area has just moved onto Universal Credit), which along with her part time employment income and maintenance from me would allow her to rent somewhere nearby with our daughter.

On the flip side, she wouldn't be able to afford to stay in the house if it were the other way round - unless I still paid the majority of the mortgage, in which case I wouldn't be able to afford to live somewhere else myself! (And I wouldn't be entitled to any support)

Logically, it makes sense to us - only one of us could possibly afford the house and it means we get to keep something familiar for our daughter rather than have to get used to two new homes whilst coming to terms with her parents splitting up. However, I am concerned that it could be argued that my ex has deprived herself of capital by not insisting to be bought out or selling the house. I definitely couldn't afford to buy her out, and if we sold the house we'd both end up worse off - in the sense that she still wouldn't be able to get a mortgage on her own, and with prices locally I'd have to take a huge step backwards. (That sounds really selfish when I've read it back but wasn't intended to be!)

Apologies for the long post, but would welcome any advice!

selhurst_sound

I'd also add, the reason that she's happy to transfer the house to me is because she is the one who has ended the relationship. Not sure whether that would ever count for anything in the eyes of the authorities though!

pmlindyloo

I have found this link about Universal Credit and capital.

https://about.universalcredit.service.gov.uk/kms/Pages/Jointly_owned_capital.htm

Deprivation of capital will occur when the claimant has knowingly transferred their capital in order to gain benefits.

Since you jointly own the property your ex has obviously a financial interest in it and this financial interest is the capital in question (as I am sure you are aware)

I can understand your reasoning behind what you are doing but the decision maker might not see it this way. From their point of view selling the property (presuming there is equity in it) would release funds and your ex would be entitled to half. Her capital would then be taken into consideration for benefit purposes.

Perhaps someone else will have more ideas. or perhaps speak to CAB and see what they think?

Have you explored all possibilities? Ex staying in the house with financial help from you for the mortgage in lieu of child support? Selling the house and splitting the proceeds? Things might change in the future and both of you would be able to get back on the property ladder if you each met someone else.

bloolagoon

If you are under UC then your OH will get a housing allowance so it could be better for her to stay in it. Not 100% sure how it works but I do know that on paper low earners with a mortgage will get help.

pmlindyloo

bloolagoon wrote: »

If you are under UC then your OH will get a housing allowance so it could be better for her to stay in it. Not 100% sure how it works but I do know that on paper low earners with a mortgage will get help.

According to this link

http://www.entitledto.co.uk/help/Support-for-mortgage-interest-Universal-Credit

If you are earning then you are not entitled to SMI.

Will look for confirmation of this.

pmlindyloo

Another link saying the same

https://www.moneyadviceservice.org.uk/en/articles/government-help-if-you-cant-pay-your-mortgage

(I didn't know that the waiting period is going back to 39 weeks from April 2016)

pmlindyloo

Just to add, since your ex is working, if she stayed in the house then she would be claiming tax credits (as a single claim) and possibly council tax reduction.

You could try putting her details into the benefit calculator on https://www.entitled to as a single claim to see what help she might get. This would give you a rough idea of what money she would have coming into the household as a single parent with a child. Child Support is not taken into account.

selhurst_sound

Looks like the idea of keeping the house is getting further and further away. I guess ultimately it will be up to the UC Decision Maker, but you've got to think they're not going to decide in favour of paying out.

Her staying in the house isn't really an option as regardless of whether she got support, it would stop me from getting a mortgage on another place.

bloolagoon

pmlindyloo wrote: »

According to this link

http://www.entitledto.co.uk/help/Support-for-mortgage-interest-Universal-Credit

If you are earning then you are not entitled to SMI.

Will look for confirmation of this.

I thought the allowance for the taper was higher?

vlad

To make things simpler now and more to the point going forward I would sell the house.

xylophone

in the sense that she still wouldn't be able to get a mortgage on her own, and with prices locally I'd have to take a huge step backwards. (That sounds really selfish when I've read it back but wasn't intended to be!)

Only sounds?

You expect the tax payer to provide you with an indirect subsidy so that you don't have to "take a huge step backwards"?