Universal credit and owning a second property

staceyfaye

Hi, 
I am looking for some clarity on our situation which I can't seem to find online.  My husband got made redundant some time ago and has had no luck finding work.  I am now also at risk of redundancy and have been checking out what I would be entitled to should the worse happen.
We own our own home, but also own and rent a second property.  My mother in law lives in this home, she pays £90 a week rent.
I can see that if we have savings over £16,000 (which we do, the second home) we are not entitled to Universal Credit.  However I have read that if a relative over pension age lives in it we do not have to include the capital of the property in the claim.  But, if she is renting it is this still applicable? Do we just declare the rental income and not the capital of the house?

I am really worried, we will be entitled to no help apart fro JSA for 6 months.  It doesn't seem realistic to expect us to evict my MIL, sell the house and live of that money.  I mean we will if we have to but it could take months to sell and I don't know what I am supposed to do in the meantime!

Any advice would be appreciated, thank you.

calcotti

The capital disregard applies if your MIL is a pensioner or, if working age, has Limited capability for Work.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/864939/admh2.pdf

H2048 Premises that are occupied as the home by a close relative of a person are disregarded indefinitely where the close relative has
1. LCW or
2. reached the qualifying age for SPC.

ToxicWomble

Is £90 a week fair market rent for the property or does that not factor at all ?

calcotti

As regards the rental I am not sure whether this will be taken into account or not. The safe thing to do will be to declare it but I can's see that it falls under any of the categories of income specified as being taken into account https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/831930/admh5.pdf
This seems to be counter intuitive but may be logical because th house itself is disregarded and there is probably an assumption that you would not evict your MIL if she didn't pay.
No doubt someone will correct me if I'm missing something.

calcotti

ToxicWomble said:

Is £90 a week fair market rent for the property or does that not factor at all ?

I don't think it is relevant although it could be relevant if MIL was claiming Housing Benefit to pay it.

pmlindyloo

The OP and her husband need to check whether they are eligible for new style JSA (the old contribution based JSA - based on previous two full tax years NI contributions.)
Since they do not have any housing costs (am I correct?) or any children or any disabilities then I believe that two new style JSA claims would pay more than UC.
If you can't find employment or have no savings then selling the second property may be necessary.

staceyfaye

calcotti said:

As regards the rental I am not sure whether this will be taken into account or not. The safe thing to do will be to declare it but I can's see that it falls under any of the categories of income specified as being taken into account 

This seems to be counter intuitive but may be logical because th house itself is disregarded and there is probably an assumption that you would not evict your MIL if she didn't pay.
No doubt someone will correct me if I'm missing something.

It has always been counted under "other income" and we have paid tax on it accordingly.  I think the best solution would be for the time being, stop charging the rent - and then we won't need to declare the property as capital because MIL is of pension claiming age.  Then re-asses the situation when one of us finally get another job.

staceyfaye

pmlindyloo said:

The OP and her husband need to check whether they are eligible for new style JSA (the old contribution based JSA - based on previous two full tax years NI contributions.)
Since they do not have any housing costs (am I correct?) or any children or any disabilities then I believe that two new style JSA claims would pay more than UC.
If you can't find employment or have no savings then selling the second property may be necessary.

I am entitled but husband is not.  We have two young children which is why it is so concerning.  We don't have housing costs so we won't become homeless thankfully!

huckster

Thought it was worth adding the legislation.  1 (2) is interesting.  Would this disregard include a second property ?

SCHEDULE 10 Capital to be disregarded

Premises

1.—(1) Premises occupied by a person as their home.

(2) For the purposes of this paragraph and paragraphs 2 to 5, only one set of premises may be treated as a person’s home.

2.  Premises occupied by a close relative of a person as their home where that close relative has limited capability for work or has reached the qualifying age for state pension credit.

3.  Premises occupied by a person’s former partner as their home where the person and their former partner are not estranged, but living apart by force of circumstances, for example where the person is in residential care.

4.—(1) Premises that a person intends to occupy as their home where—

(a)the person has acquired the premises within the past 6 months but not yet taken up occupation;

(b)the person is taking steps to obtain possession and has commenced those steps within the past 6 months; or

(c)the person is carrying out essential repairs or alterations required to render the premises fit for occupation and these have been commenced within the past 6 months.

(2) A person is to be taken to have commenced steps to obtain possession of premises on the date that legal advice is first sought or proceedings are commenced, whichever is earlier.

5.  Premises that a person has ceased to occupy as their home following an estrangement from their former partner where—

(a)the person has ceased to occupy the premises within the past 6 months; or

(b)the person’s former partner is a lone parent and occupies the premises as their home.

6.  Premises that a person is taking reasonable steps to dispose of where those steps have been commenced within the past 6 months.

huckster

(2) For the purposes of this paragraph and paragraphs 2 to 5, only one set of premises may be treated as a person’s home.
What I think is meant by this, is that sometimes a Universal Credit claim may have couple claimants with such a large family that they need to have two homes. This is why it talks about a set of premises.
I am not sure this disregard would apply to a second bought for investment purposes, which you have let to a relative.
So you could claim Universal Credit and the decision  is made that they will count the capital value in the second property. 
Think you need to read the whole of the legislation.  

tomtom256

staceyfaye said:

It has always been counted under "other income" and we have paid tax on it accordingly.  I think the best solution would be for the time being, stop charging the rent - and then we won't need to declare the property as capital because MIL is of pension claiming age.  Then re-asses the situation when one of us finally get another job.

You would still need to declare the property, so that the DWP could make a decision on whether it falls into a disregarded catagory. You don't make that decision!