Universal Credit entitlement and Equity from house sale

simbar44

Hi, I am recently separated with two children under 16 and in receipt of Universal Credit as I am on a low income.  The family home is being sold (accepted an offer and started the process) and I will be looking for somewhere to rent soon with my kids. I can’t get a mortgage on my salary. I will receive approx £100k in equity from the house sale which is not enough to buy a suitable house. My question is.......will my UC stop if I am in receipt of this money?  I can’t get a mortgage right now so can this money be protected and if so for how long? Also, am I entitled to the housing cost element if I am working?  I’d be so grateful for any advice, thank you! 

pmlindyloo

simbar44 said:

Hi, I am recently separated with two children under 16 and in receipt of Universal Credit as I am on a low income.  The family home is being sold (accepted an offer and started the process) and I will be looking for somewhere to rent soon with my kids. I can’t get a mortgage on my salary. I will receive approx £100k in equity from the house sale which is not enough to buy a suitable house. My question is.......will my UC stop if I am in receipt of this money?  I can’t get a mortgage right now so can this money be protected and if so for how long? Also, am I entitled to the housing cost element if I am working?  I’d be so grateful for any advice, thank you

If you have savings over £16000 then this will mean that you are no longer eligible for Universal Credit.
I do not know your personal circumstances but have you looked into shared ownership?  The rent part of a shared ownership property can be part of an assessment for Universal Credit but, of course, it would depend on your financial circumstances.
If you intended to buy another property with the money from the sale of your current property then I believe that the capital can be ignored for 6 months (I need to check this) and you could continue to claim UC whilst you are buying another property.

pmlindyloo

Here you are:
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 home1.
1 UC Regs, Sch 10, para 13

poppy12345

Once the money goes into your bank you will also need to contact your local council regarding your council tx reduction because this will also stop. If you're the only adult in your house then you will continue to recieve the 25% single person discount.

Spoonie_Turtle

The housing element of UC is dependent only on your housing situation (i.e. if you are liable for rent), not on whether you work.

[It is possible you may be thinking of the Support for Mortgage Interest loan, for which only people who have had 9 consecutive months of 0 earnings are eligible.]

simbar44

Spoonie_Turtle said:

The housing element of UC is dependent only on your housing situation (i.e. if you are liable for rent), not on whether you work.

[It is possible you may be thinking of the Support for Mortgage Interest loan, for which only people who have had 9 consecutive months of 0 earnings are eligible.]

Thanks, I meant when I move into rented would I be able to claim the housing element. With £100k of equity in the bank though I suspect not. 

simbar44

pmlindyloo said:

simbar44 said:

Hi, I am recently separated with two children under 16 and in receipt of Universal Credit as I am on a low income.  The family home is being sold (accepted an offer and started the process) and I will be looking for somewhere to rent soon with my kids. I can’t get a mortgage on my salary. I will receive approx £100k in equity from the house sale which is not enough to buy a suitable house. My question is.......will my UC stop if I am in receipt of this money?  I can’t get a mortgage right now so can this money be protected and if so for how long? Also, am I entitled to the housing cost element if I am working?  I’d be so grateful for any advice, thank you

If you have savings over £16000 then this will mean that you are no longer eligible for Universal Credit.
I do not know your personal circumstances but have you looked into shared ownership?  The rent part of a shared ownership property can be part of an assessment for Universal Credit but, of course, it would depend on your financial circumstances.
If you intended to buy another property with the money from the sale of your current property then I believe that the capital can be ignored for 6 months (I need to check this) and you could continue to claim UC whilst you are buying another property.

Thank you, yes shared ownership is something I will look into. The intention is to use the money to buy a house for us to live in but as I am unable to get a mortgage at the moment I was hoping the money could be protected for longer. 

poppy12345

simbar44 said:

Spoonie_Turtle said:

The housing element of UC is dependent only on your housing situation (i.e. if you are liable for rent), not on whether you work.

[It is possible you may be thinking of the Support for Mortgage Interest loan, for which only people who have had 9 consecutive months of 0 earnings are eligible.]

Thanks, I meant when I move into rented would I be able to claim the housing element. With £100k of equity in the bank though I suspect not. 

Simple answer is no. As you will have more than £16,000 then you won't be entitled to any means tested benefits. It will only be disregarded for 26 weeks if you plan on buying another house, otherwise it will be classed as savings. Either way, once it's in your bank you need to report the changes.

Spoonie_Turtle

simbar44 said:

Spoonie_Turtle said:

The housing element of UC is dependent only on your housing situation (i.e. if you are liable for rent), not on whether you work.

[It is possible you may be thinking of the Support for Mortgage Interest loan, for which only people who have had 9 consecutive months of 0 earnings are eligible.]

Thanks, I meant when I move into rented would I be able to claim the housing element. With £100k of equity in the bank though I suspect not. 

If you can claim UC and you're renting, you can claim housing costs. The housing element is not dependant on savings and how the money is treated, but your entire UC claim is.