Inheritance on benefits - how can we use it to gain freedom?


This is a bit of a long one, and having never had money before I'm not at all savvy with it - so please be gentle! 

We're due to inherit some money from my late father in law, my husband seems to think it will be around £30k though we won't know for sure for a few months. We currently live in an affordable housing terraced house with our 3 kids (2 of them have special needs) and claim housing benefit, tax credits, etc. At some point in the near future we'll be moved over to UC which is going to leave us short. Just before the pandemic we started our own business which is doing well considering we haven't been able to work through lockdowns, but we were really hoping that we would be able to afford to come off benefits this year which won't be possible anymore in light of covid. We live in West Sussex in one of the most expensive UK cities compared to the average salary, and a house the same size as ours would cost £1400 pcm to rent privately... which is obviously out of our reach! We have family in Shropshire so are considering a move up there. 

I realise that receiving this inheritance will stop/reduce our benefits, and it will just get eaten up by rent, bills and food. We'd really like to use it to make a move that will get us off of benefits and hopefully out of affordable housing, or at least out of this area. It's a large sum, but not large enough to make this goal achievable! We can't get a mortgage because my husband's credit history is dire after his previous business going under and a divorce, plus he's in his 60s now (I'm a lot younger but unable to work because of our kids' needs). We've considered buying land in Shropshire and building a house (obviously been watching too much Sarah Beeny's mortgage free doc :D ) but no idea whether this is actually possible. I've also suggested moving on to a narrowboat but husband isn't so keen haha! 

So I guess the question is: what can we do to make our dream possible? And if there really isn't a way, what would be the best thing to do with the money that would help us get off of benefits for good? 

Thanks in advance for any help! 


  • tacpot12
    tacpot12 Posts: 7,937 Forumite
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    I don't think that building a property is going to be feasible. Building a house from scratch is a massive undertaking. The land and building materials (if you can get them) will cost at least £170K and probably closer to £250K. If you have the skills to build it yourself, you might keep the cost to £170K, but it will limit the time you can spend on your business drastically - it's more than a full time job, and you have child-care responsibilities as well as the business. If you pay someone to build it, you can add another £100K to the cost. You will also have architects fees and other costs such as running services to the land (or very large capital costs if you decide to live "off-grid"). I think that this is so far beyond what you personal and financial capabilities are that you should not think about this any more. 

    I would should you have a look at Shared Ownership properties. I had a quick look on Rightmove and found that there were a couple of properties in Telford that you could by 25-30% of for around £55K. 

    If you can get mortgage of £25K, you could buy such a property if you combine it with the inheritance. You would pay rent on the portion you don't own, but you would gain some security and potentially move to a better neighborhood. You need to check what the rent would be compared with just renting a property outright. If you aren't saving money, it's not worth it. You should also check what rights the other owner has to increase the rent. Some rent increase is probably inevitable over the long-term, but you need to have some cap or control over this.

    Universal Credit will help with the rent while your business is still being built, but you will need to be sure that the business can support you and the rent. If your business involves providing a service to customers in the locality, you will need to be prepared for a drop in income as customers in Shropshire are less likely to be able to pay as much as customers in West Sussex.

    Hope this helps
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • Hermann
    Hermann Posts: 1,360 Forumite
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    Before you start making any decisions at all you should first get an accurate understanding of the effect of this inheritance on your benefits.
    You may be over estimating the impact.
    Tax credits for example will likely continue, you can have the capital and it's just the interest you earn that is treated as income and as you'll get virtually no interest it'll have little effect.
    As peoples circumstances vary wildly it's not possible to just state what the effect will be but you can work through this for each of the benefits you receive.

    You also mention being switched on to UC at some point in the future, it's worth remembering that if you are switched over you have a guarantee that you won't be any worse off so would be topped up to what you had under tax credits. If you voluntary change over you lose that guarantee.
    This is called transitional protection and you can read about it here....

    £30k is too small a sum for the sort of housebuilding projects you mention, perhaps better to consider if there is any business investment you could make to generate a better income going forward having first paid off any high interest debts and provided for anything the family needs to make their life function better, stick to needs rather than treats though or the money will soon disappear! 
  • theoretica
    theoretica Posts: 12,294 Forumite
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    Are you aware of house swaps?  It is something that might be worth looking into, whether you would be eligible to swap your affordable housing for a different one which better meets your needs in location/size/type.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • Thank you all :) told you I was a moron when it came to money-related matters! Thanks for being so kind. I'll look in to all the options you guys have recommended, and hopefully the way will become clear! 
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