Universal Credit and buying house

Jnnt

Hi There, please advise - separated from husband (divorce pending) and marital home being sold. I have two children from former relationship and need to claim Universal Credit. I work but understand this is how 'tax credit' as was is claimed now. I am buying a house for me and then children to live in, receiving a gift from parents, using equity from sale of marital home and taking out a mortgage in my sole name. Will the gift from parents and equity from sale stop my entitlement to universal credit ? - all of this capital will go into new home. Thanks

calcotti

I suggest you arrange for the money from your parents to be paid direct to the conveyancing solicitor at the appropriate time. That way it is never yours.

Money from the sale of property which is to be used for the purchase of another property can be ignored for 6 months (or longer if reasonable). See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/787441/admh2.pdf

Amount to be used to purchase premises
H2119 Where a person has received an amount within the past 6 months which is to be used to purchase premises that the person intend to occupy as their home, that amount can be disregarded from the calculation of that person’s capital where it
1. is attributable to the proceeds of the sale of premises formerly occupied as their home or
2. has been deposited with a housing association (see H2045) or
3. is a grant made to the person for the sole purpose of purchasing a home.

Is it reasonable to disregard for longer
H2120 The DM may decide it is reasonable to disregard the amount for a longer period if, for example
1. people have tried but not found premises which are suitable for their or a member of their family's needs (in particular, if one of them is disabled and needs a certain type of accommodation)
2. the person has found premises and the
2.1 sale has not been completed or
2.2 seller later decides not to sell.

You will need to evidence the previous sale and that are searching for a new property to purchase.

Jnnt

Thank you so much for detailed reply.. solicitor is saying that gift 'has to' be paid into my account first - I wonder whether H2119 point 3 applies - 'grant' made to person with sole purpose etc ? do you know what is meant by the word 'grant' ?

calcotti

Jnnt wrote: »

Thank you so much for detailed reply.. solicitor is saying that gift 'has to' be paid into my account first - I wonder whether H2119 point 3 applies - 'grant' made to person with sole purpose etc ? do you know what is meant by the word 'grant' ?

I don’t see a definition of grant, to me it conveys something different to a personal gift. I suggest asking the solicitor again. If they insist the money go to you first then arrange things such that the money is with you for as little time as possible. Most importantly if you have claimed UC your entitlement is worked out based on your circumstances at the end of the monthly assessment period so you need to make sure the money comes in and goes out within the same UC assessment period. Getting a letter from your parents confirming that the money is gifted to you for the express purpose of purchasing a house and if not so used is to be returned to them may help.

I assume you have neither of these pots of money yet so neither are an issue for claiming UC now. When the money comes from the house sale you will need to tell DWP but explain that you are setting it aside for a new purchase. If you can arrange for your parents money to come in and go out within a short period within the assessment period thenI think you can get away without reporting it. However the letter from your parents would be evidence should the DWP ask you about the money at a future date.

Additional note: if your existing property is not yet sold then your share of that property is capital. However there are disregards for

Premises ceased to be occupied
H2114 Where a person has ceased to occupy premises as their home following estrangement from their former partner, those premises can be disregarded from the calculation of that person’s capital where
1. the person has ceased to occupy those premises within the past 6 months or
2. the person’s former partner is a lone parent and occupies the premises as their home.

Premises person is trying to sell
H2115 Where a person is trying to dispose of premises, they can be disregarded from the calculation of that person’s capital where they are taking reasonable steps to dispose of the premises and those steps have been commenced within the last 6 months.

Is it reasonable to disregard for longer
H2116 The DM may decide to disregard the premises for a longer period where for example the person has done all they can to sell the premises and the asking price is no more than the premises are worth.

Meoleman

I am loaning money to my son to buy a house as he cannot get a mortgage in the present circumstances. His work has virtually dried up so he
 will probably need to apply for Universal Credit until things pick up. (He falls through all the covid aid packages). If he was paying a mortgage I believe he would get some assistance to pay that. Can he get help for making repayments to family for a loan he has received? If not is there any way round the problem? 

KatrinaWaves

Meoleman said:

I am loaning money to my son to buy a house as he cannot get a mortgage in the present circumstances. His work has virtually dried up so he
 will probably need to apply for Universal Credit until things pick up. (He falls through all the covid aid packages). If he was paying a mortgage I believe he would get some assistance to pay that. Can he get help for making repayments to family for a loan he has received? If not is there any way round the problem? 

It’s really best to start your own thread but to your questions:

1. no he will not get help towards his mortgage until 9 months with zero income at all, and then it is a loan.

2. no of course he cannot get help to pay back a family member. 

calcotti

If he expects to have to rely on UC for a while this is not a good time to take on a mortgage (even if he can get one which is probably doubtful at the moment). If renting he will be eligible for help with the rent, if paying a mortgage he will need to use any support provided for his living costs to pay the mortgage or fall into mortgage arrears.

poppy12345

Meoleman said:

I am loaning money to my son to buy a house as he cannot get a mortgage in the present circumstances. His work has virtually dried up so he
 will probably need to apply for Universal Credit until things pick up. (He falls through all the covid aid packages). If he was paying a mortgage I believe he would get some assistance to pay that. Can he get help for making repayments to family for a loan he has received? If not is there any way round the problem? 

Yes, he can save the money and then repay you.

Regardless of the 9 consecutive assessment periods with zero income, the loan for the mortgage won't even be possible at all if there's no mortgage to pay.

Whether he can claim Universal Credit at all will totally depend on his circumstances.

May i ask where he's living now?

Alice_Holt

Meoleman said:

I am loaning money to my son to buy a house as he cannot get a mortgage in the present circumstances. His work has virtually dried up so he
 will probably need to apply for Universal Credit until things pick up. (He falls through all the covid aid packages). If he was paying a mortgage I believe he would get some assistance to pay that. Can he get help for making repayments to family for a loan he has received? If not is there any way round the problem? 

    Not a good idea.

    Better that he rents now (what is his current situation?), then you can help him get onto the housing ladder once he is earning well again and off benefits.
   Read this very carefully:
     https://www.gov.uk/support-for-mortgage-interest/what-youll-get
    Note it is a loan (and charged on the property), there is a wait of 9 months, if there are any earnings the 9 month period is reset.

   And as Katrina says he cannot get help from the taxpayer to pay back a family member.