Deprivation of Capital and Income based benefits

dulededulede

Hi,
I am posting for my son and his partner. Both are mid 20s and both have saved since first working and have not simply drank their money. They have been careful knowing that it is so hard to get on the housing ladder nowadays. The past year they have planned on moving firstly into a rental property for just six months while they find a home. They have had enough of being kept by parents and want independence. 
So the savings they have are expressly for home purchase and had this been any normal year there would be no real issue. But with coronavirus both have been furloughed since mid March. My son, however, has been advised redundancies are likely coming and there will be an announcement as to who is affected in July. So, they are currently in the process of moving into their first home together, a rented house for the six months just to get their bearings. They have recently signed and paid the entire six months up front as they had limited credit scores as have never had their own utility bills, property, nothing apart from their personal financed cars. So all was okay until Friday when my son found out about the potential redundancy. It may not affect him, he doesn't know, but they are both committed to moving on in life and have already signed and committed to the rented property, at least for six months. They also just ordered a bed, fridge and washing machine. But now he has no idea if he will basically be reduced to New style JSA under contribution rules only. They have saved practically everything for years simply to buy a home together and have minimised all other fun that most of their age do such as holidays and weekly drinking. 
I have over the past 48 hours though found out about deprivation of capital and it would be fine if they had, instead of renting for the next six months, put all their money together and mortgaged a house. But they haven't and are worried sick they won't be able to use the money towards a home. My son wants to get another job asap but also knows that picking up the worst job possible will hinder his chances in getting another accounts assistant position. It seems awful harsh that instead of being able to claim as others will they will be both restrained from purchasing a home and claiming any means tested benefits as if he can't be allowed to buy a home he will remain with notional capital in place and will only whittle down over about 18 months at which point they'd have no mortgage, a rented home they'd been paying for and which is building someone else's nest egg and not helping them get on the property ladder. I hope you can understand my query. I just want to know that the money they have both spent 9 years saving is all for nought. Obviously if he doesn't lose his job then it is an irrelevant question but if he does in the current situation due to job losses nationwide and local in all spheres; he can't feel confident of gaining any form of job that will move him forward or even keep him afloat for a substantial time. Anybody that can advise please do. They have no other property other than their cars as they both work in different places. I just feel so upset for them and cannot advise them as potentially the mess they are in might only get worse. This isn't to say that having money is not better off than many but if they basically end up with their money saved funding their survival on fairly low rates of income based benefits, then I don't know which is best, to spend the money, get in a home, struggle to pay and hope a job comes along. Thank you anyone with advice. 

poppy12345

If the worst does happen then New style JSA isn't means tested so savings/capital do not affect it. Providing he's paid the correct amount of NI contributions in tax years April 2017 to March 2019 then he'll be able to claim. If he's over 25 then it pays £74.35 per week for 26 weeks.

Universal Credit is means tested and to claim this they will need to claim together as a couple. His partners earnings will affect the amount they are entitled to. However, savings/capital of £16,000 will prevent them from claiming, even if the money they've saved is for a deposit on a future house, it doesn't matter. For savings of £6,000 and over will see a reduction of £4.35 per month for every £250 over that amount.

KatrinaWaves

It doesn’t matter what the intentions are for the money or how they saved it or why or how wonderful they have been for not spending it on alcohol, savings are savings and if they need to claim means tested benefits then they are in the same boat as anyone else with savings 

unkle

Sadly, you can be penalised (or feel as if you are) for being sensible/prudent.
I'm about to be made redundant, have never been out of work since I started in July 1989, never claimed a single benefit etc.
Yet, of course, I will only be entitled to the new JSA of £70 odd a week as my savings etc exceed the limit....... sometimes makes you wonder why you bother doesn't it!

dulededulede

I should like to add that never had he even considered needing benefits as until the lockdown things were fine. Also, the issue to do with finding a way to claim jobseekers of any type long term. He wants to get a new job asap as being on JSA is just going to hit them too hard so needs work and not benefits. The problem is though that nobody knows what is happening or what will happen over the next few months. Massive companies have faced unheard of levels of job losses and closures so he just doesn't know if he can even expect to bounce back or if this is just pie in the sky hope. 

poppy12345

unkle said:

Sadly, you can be penalised (or feel as if you are) for being sensible/prudent.
I'm about to be made redundant, have never been out of work since I started in July 1989, never claimed a single benefit etc.
Yet, of course, I will only be entitled to the new JSA of £70 odd a week as my savings etc exceed the limit....... sometimes makes you wonder why you bother doesn't it!

I know what i'd rather have...

dulededulede

Yes, it is shocking really. I've just been reading up on bits that don't make the most sense to me at least. But providing their intention was never to gain benefits, the money has always been earmarked for home purchase, then usage of the money for that purpose cannot be seen as anything other than the equivalent of them already having a home. There is a rule about it not counting towards your own home. But I assume they'll need to check. I don't know what he'd get on UC anyway and don't know if sacrificing their entire life's goal so far for what may only be a measly top up is worth it. He can't be better off simply letting everything they have worked for go down the drain. They'll have to choose one way or the other but I think buying a home and hoping to find a job soon enough has to be the option they take. If the use of their savings as always intended is allowed and doesn't infringe deprivation of capital rules then they can apply for UC top up. But if not they'll have to struggle and balls to the UC top up based on pure income; as savings would have gone on home. After all the country may just bounce back as Johnson expects. 

dulededulede

Thanks all

unkle

poppy12345 said:

unkle said:

Sadly, you can be penalised (or feel as if you are) for being sensible/prudent.
I'm about to be made redundant, have never been out of work since I started in July 1989, never claimed a single benefit etc.
Yet, of course, I will only be entitled to the new JSA of £70 odd a week as my savings etc exceed the limit....... sometimes makes you wonder why you bother doesn't it!

I know what i'd rather have...

Agreed, but I could quite easily have spent the lot, expensive holidays, newer car etc, if I had £5k in savings/asset we'd get over £30k a year in benefits! 

poppy12345

unkle said:

poppy12345 said:

unkle said:

Sadly, you can be penalised (or feel as if you are) for being sensible/prudent.
I'm about to be made redundant, have never been out of work since I started in July 1989, never claimed a single benefit etc.
Yet, of course, I will only be entitled to the new JSA of £70 odd a week as my savings etc exceed the limit....... sometimes makes you wonder why you bother doesn't it!

I know what i'd rather have...

Agreed, but I could quite easily have spent the lot, expensive holidays, newer car etc, if I had £5k in savings/asset we'd get over £30k a year in benefits! 

Claiming benefits isn't the greatest thing in the world. It's not as easy as some people think it is and i'm sure there'[s going to be a lot more people realising this very soon. The benefit cap applies to some people also.

dulededulede

I've upset myself so far but now have to decide whether to bring up the fact that not only may he lose his job but that there is the potential that he may be affected by called deprivation of capital. He's down enough at the moment and I don't think he can see down the road where he actually has to apply for benefits. S#@& happens. I don't know whether to just say nothing and see what happens with redundancy first. No point in adding upset on top of stress they already have. For all we know he could be offered a different job role.

I have slipped straight into a glass ruddy empty mode and they don't need me adding to any issues they have at the moment. Probably the best advice I can give them is go the usual route and seek advice. I don't know enough and am too close to the situation. Ultimately, I'd have them back living with me if necessary and let him find work again before I let them destroy any dreams they've had. That is what parents are for in the end. Thanks all.