Universal Credit

Rubyroobs

Can anyone explain how renting out a house affects Uc entitlement ? Person moved in with a friend whilst unwell and rented her house ( mortgaged ) out to tenants. Does not claim any rent element on UC. House is not for sale as the person is hoping to move back in when well enough. Thanks.

calcotti

A house is ignored if you occupy it. Once you cease to occupy it it becomes a capital asset and if the capital value is greater than £16,000 ends entitlement to UC unless any of the capital disregards apply.

As your question indicates a house can be disregarded indefinitely 

Premises not occupied as the home for a time
H2038 Premises usually occupied as the home are disregarded if
1. they are not occupied for a time and
2. the intention is to return to live in the premises as the home.
For example, if a person goes into residential care on a temporary basis and intends to return to the house which the person usually occupies as the home, the house is disregarded.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932331/admh2.pdf#page7

If the property has been rented out it may be harder for DWP to accept that this is a temporary absence.

If the disregard is accepted then the rental income is treated as a return on capital.

poppy12345

If there's equity in the house and it's more than £16,000 then they will be excluded from claiming UC. If the house is up for sale then it can be disregarded for 6 months and sometimes longer but proof that the house is up for sale maybe required. If they are already claiming UC did they report owning a house why they claimed?

Rubyroobs

poppy12345 said:

If there's equity in the house and it's more than £16,000 then they will be excluded from claiming UC. If the house is up for sale then it can be disregarded for 6 months and sometimes longer but proof that the house is up for sale maybe required. If they are already claiming UC did they report owning a house why they claimed?

Thanks Poppy. No I don't think they reported the owning of the house when they claimed UC around 6 months ago.

calcotti

Rubyroobs said:

poppy12345 said:

If there's equity in the house and it's more than £16,000 then they will be excluded from claiming UC. If the house is up for sale then it can be disregarded for 6 months and sometimes longer but proof that the house is up for sale maybe required. If they are already claiming UC did they report owning a house why they claimed?

Thanks Poppy. No I don't think they reported the owning of the house when they claimed UC around 6 months ago.

They wouldn’t need to if they were living in it. It only becomes relevant when they no longer occupy it. What are they doing in respect of post etc. If they are now having post sent elsewhere and have let out the property it makes it more difficult to evidence an intention to return in order to try and invoke the temporary absence disregard

poppy12345

Then they will need to report the changes onto their journal. Always better to be honest and upfront, rather than DWP find out. Their UC will likely be suspended whilst a decision's is being made.

Robbie64

Was the person living in the property they own when the UC claim was made? Or had they already moved in with the friend? I've not made a UC claim so don't know the questions that are asked but I'd be surprised if it doesn't ask about ownership of a property as every other means tested benefit claim form (either in paper form or electronic) has always done.

calcotti

To the best of my knowledge the UC application process only asks ‘Do you have housing costs’ and if you answer no then no other questions are asked and the where you live list includes ‘I live in a house I own (with or without a mortgage)’.

Rubyroobs

calcotti said:

To the best of my knowledge the UC application process only asks ‘Do you have housing costs’ and if you answer no then no other questions are asked and the where you live list includes ‘I live in a house I own (with or without a mortgage)’.

Yes I think this is correct. This person was living elsewhere when the Uc claim was made, does not claim any rent element as stays with a friend.

calcotti

Rubyroobs said:

calcotti said:

To the best of my knowledge the UC application process only asks ‘Do you have housing costs’ and if you answer no then no other questions are asked and the where you live list includes ‘I live in a house I own (with or without a mortgage)’.

Yes I think this is correct. This person was living elsewhere when the Uc claim was made, does not claim any rent element as stays with a friend.

I had misunderstood, I thought from your opening post that when the UC claim was made they were living in the house they own.

If they were not living in the house at the time then it should have been declared as capital and a request made for it to be disregarded. A Decision Maker would then have reviewed the circumstances to see whether or not a UC claim award could be made.

Rubyroobs

Ok thanks. I'll let them know to declare it now and they will have to deal with the consequences I guess.