Universal Credit and Landlords with Buy-to-Let Property

MarcoRoth

I have two properties that my family (wife and 4 children) don't live in and we rent out to private tenants.

These are two terraced houses worth approx. £270k combined.

We collect approx £675/month each and have £233/month mortgage on each one. Less gas safety checks, agency fees, accountancy fees, repairs or any council tax we have to pay if the properties are unoccupied.

We barely 'make' £6,000/year from the houses (taxable).

My wife earns £11,750/year and we get approx £3250 in family allowance. This gives us a total income for the family of £21,000/year. That is, to feed and clothe 2 adults and four children.

Will we qualify for Universal Credit?

I cannot get the old-style Job Seekers Allowance (Unemployment Benefit), even though I am out of work and very actively looking for work.

Thankfully we own our own home outright with no mortgage etc.

atlantis187

As far I know u will get Zero money on UC if u own another property which u do not live in as u will be seen to have 'capital' above £16000' so the £3250 u are currently getting I presume for tax credits will also disappear when claiming UC, there is some sort of transitional protection which I think will last for 1 year.

huckster

Nothing stopping you claiming UC and requesting that a decision maker considers whether a temporary disallowance of capital could be applied to any equity you have in the 2 let properties.

I have seen an example of one person claiming UC with several let properties and the rental income was treated as additional capital when received. So they had say £8000 in savings and the extra capital added over x number of months meant that they then later became ineligible to claim UC as the savings exceeded £16000.

Given that any disallowance might only be temporary, as UC might expect that you give notice to tenants to sell a let property to access equity available, I would question whether claiming UC is really the way forward.

If you are claiming tax credits, please bear in mind that any UC claim that is accepted will end the tax credits claims. If you found you were worse off, there is no going back to tax credits.

What is your own working/earnings situation ?

Can your wife increase her earnings level ?

It seems to me that the power to change your families financial situation may be in your own hands and is not one where any Government benefits change is the answer. But you may want to get some advice from an independant source such as Citizens Advice.

calcotti

The capital value of the properties is the open market value of the properties less the outstanding mortgage less 10% allowance for sales costs. If this value is over £16,000 you are excluded from UC. As huckster says you might get a temporary disregard if you put the properties on the market. When they are sold the capital will be taken into account and UC end (assuming the capital value is over £16,000) and you will have the capital to live off until it falls below the threshold and you can claim again.

Under the old system you could have claimed Child Tax Credits (as there are no capital limits) and might have qualified for some payments but new claims are not possible.

Cheeky_Monkey

If you are struggling financially, why don't you just sell one of your three houses?

MarcoRoth

To think, those houses were bought as our pension for when we are older.

It would have paid me to blow all my money and live off the state.

calcotti

MarcoRoth wrote: »

To think, those houses were bought as our pension for when we are older.

It would have paid me to blow all my money and live off the state.

As per previous post you possibly could have got additional support by claiming Tax Credits but unfortunately the time for that has passed. Tax Credits did allow people to improve their cash flow while retaining capital, Universal Credit does not if capital is over £16,000.

OhWow

MarcoRoth wrote: »

To think, those houses were bought as our pension for when we are older.

You also had to think at about the present: how you would both finance your 4 children. It might have been better if you had brought insurance for times when you lose your job, but it's too late for this time.

MarcoRoth wrote: »

It would have paid me to blow all my money and live off the state.

"the state" are the taxpayers who don't claim benefits. Some of whom will be working hard to save to buy a house for themselves while they are renting. Why do you expect others to pay for your children and provide you with a pension for when you are older?

KatrinaWaves

You have three houses. You will not get universal credit.

It is a ridiculous notion to think someone who owns three houses qualifies for state aid.

You do not get to safeguard your ‘pension’ they are houses. They are capital. You have no money.

Alice_Holt

MarcoRoth wrote: »

To think, those houses were bought as our pension for when we are older.

It would have paid me to blow all my money and live off the state.

Far better, then, to have set up a pension than BTL.
Pension plans are tax efficient, whereas BTL has become tax adverse following recent legislation:
https://www.thisismoney.co.uk/money/buytolet/article-6084931/Buy-let-market-decline-continue-three-years.html

BTL should be viewed as a business, not a pension alternative.
It requires a long-term view and reserves to cope with repairs, maintenance, vacant periods, and rent arrears.
If as a landlord with £270k of properties which are not delivering a sufficient return, and now feeling the need to attempt a means-tested benefits claim, rather suggests to me that you failed to put much research / planning into your BTL venture.

BTW, had you put money into a more sensible pension provision, you may have been able to claim UC, as pension funds are excluded from the UC capital calculation.


Your second remark shows ignorance of the benefit system, and insults those disabled claimants who have no other option but to endure frequent assessments, and long term survival on a very limited income which has declined in real terms.

parkrunner

MarcoRoth wrote: »

To think, those houses were bought as our pension for when we are older.

It would have paid me to blow all my money and live off the state.

Times change so you need to change as well.