Selling house whilst claiming benefits

adavidson1994

Hi, 

I am after some advice please in relation to Universal Credit (including LCWRA) and also full council tax reduction benefit; and how these are effected during a house sale.

Background: This is in relation to my Dad who, he is disabled and up until 2020 was working full time so did not claim and benefits, unfortunately he is now physically and mentally disabled and has been awarded UC including LCWRA and also does not pay any council tax because of his little income. He has no savings. But fully owns his house outright with no mortgage. Over the last few years he was in an abusive relationship and as a result of this now has a lot of debts. As a family we have supported him in selling his house and he has found the perfect bungalow to move into which will have a massive positive impact on his mental health and enable him to manage more physically around a smaller house. 

My question is: How will his UC and Council tax be effected in the following situation: 

Now: No savings, owns a car outright, owns his house outright. Income of £640 UC. 

House sale: £250,000
New bungalow purchase: £183,000
Money left over: £67,000

He has a lot of debt to pay from the money left over - to things such as council tax arrears, utility arrears, a loan and to 2 family members and 1 friend who have lent him a large amount of money in cash to help him survive the last couple of years (this money has been lent in regular payments rather than one off payments). 

We are estimating the following:

Debts owed: £38700
Legal costs associated with selling the house: £3000
Money needed to make the house liveable: £22300 (including buying new things for the new property)

Total amount left over after above: £3000. 

I am asking for advice please as to if his benefits will be effected, if not - great. If they will - is there a way of preventing this by proving that the money from the house has gone on debts and moving costs etc. I of course am asking this advice to remain within the law and not break any rules at all, but please no negative comments, I have fought so hard to get where we are now and to get the UC award and I am completely exhausted myself, so do not wish to go through another claim process. 

Advice I have received so far is:

Council tax benefit: may be stopped
UC: may be stopped if £16000 or more is in savings, but once this has gone another claim can go ahead. I have also been told that UC allow a 1 year period of remaining on the benefit when moving house. BUt I am worried how the actual process works, I.e at some point the large amount of money will be paid into his account, but then very soon after debts will be paid using this and it will be used on the new house. I am led to believe that the money used to spend on the house - i.e. furniture, decorate, new bathroom etc (which is needed for his disability) are counted as savings so will therefore stop the UC and Council tax claim?

Final question: would it be acceptable to ask the solicitor to pay the debts directly to the people owed money to? Rather than it all going to my Dad and then him paying them separately? If this is allowed then what sort of proof is needed?

I am sorry for the lengthy and probably disjointed forum entry, but any advice would be greatly received. 

Thank you 

elsien

The utility arrears etc shouldn’t be a problem as they are easily evidenced.
With regards to the cash sums from friends and family, what formal records do you have for these? How has a tally been kept, and is there any way to show it was not a gift? What sort of sums are you talking about for these specific loans? 

calcotti

adavidson1994 said:UC: may be stopped if £16000 or more is in savings, but once this has gone another claim can go ahead. I have also been told that UC allow a 1 year period of remaining on the benefit when moving house. 

That isn't correct. If there is more than £16,000 entitlement to UC ends. The exception is that any money received which is to be spent on purchasing a new property can be disregarded for six months (or longer if reasonable). I assume in this case will sell and buy on the same day so dad will only see the surplus anyway so the disregard isn't relevant.

Paying off debts is allowed. 

For UC the critical thing is the amount of money in his account on the last day of his UC assessment period. If he receives the money and pays off debts within the same assessment period then his UC continues. If there is more than £16,000 on the last day the UC will stop.

I suggest that you collect all the evidence of the arrears and debts, for the family/friends debts collect bank statements showing the payments received. 

adavidson1994 said:I am led to believe that the money used to spend on the house - i.e. furniture, decorate, new bathroom etc (which is needed for his disability) are counted as savings so will therefore stop the UC and Council tax claim?

It is absolutely fine to spend money on these things but the money will count as savings until spent.

You might be able to get a six month disregard for the cost of the bathroom alterations if these re essential.

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

H2123 Where, in the past 6 months, a person has acquired a sum of money by way of a loan, grant or otherwise which is to be used for making essential repairs or alterations to premises occupied or intended to be occupied as the person’s home, that amount can be disregarded from the calculation of

that person’s capital but only where it is used for that purpose

UC Regs, Sch 10, para 15

Alice_Holt

Has he looked into claiming PIP?

https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/pip/