Is it ok to buy the flat you live in with an inheritance and continue claiming benefits

[Deleted User]

A  54 year old man who visits the local mental health drop-in I attend is due to inherit £32,500. He is on Universal Credit, Housing Benefit, Council Tax Benefit and PIP, and has lived in his council flat for the last 10 or so years. He has been advised, and encouraged, to look into buying his flat from the council through the Right to Buy scheme. Eligible for a 70% discount he could possibly buy it outright and may also be able to afford the fees involved, just about (He's guessing the flat would be sold to him for around £100,000). Would it be ok for him to do this and continue to claim his benefits (with the exception of Housing Benefit given he won't need to pay rent any more)?

comeandgo

Who is advising him to do this?  It is an extremely bad idea.  He will have to pay for upkeep of property and insurance which he does not do now and I’m assuming his rent is at least partly paid?  

whizzywoo

He is saying that with the 70% discount he could buy it outright so no mortgage would be needed.

Many people can and do own their own properties when living on benefits, whether mortgaged or not.  

With careful management it is possible.  I speak from personal experience. 

calcotti

He cannot be receiving Universal Credit and Housing Benefit, the help with rent will be part of UC. 

When he receives the money he will no longer be entitled to any of the existing benefits other than PIP.

If he then uses the money to fund a property purchase he can reapply for benefits. 

However I agree with others that purchasing a property may not be appropriate.

When the UC stops due to the inheritance he could apply for new style ESA which will allow him to continue to get NI credits for Incapacity for Work even though he will not be paid anything.

lisyloo

The main issue I think is the upkeep and insurance.
houses can be expensive to maintain e.g. new roof.
the fact that some people have done it and succeeded does not mean it’s a good idea as something could go wrong with this house.
so how will he pay for ongoing upkeep of the building? This is normally covered by the rent.

elsien

If it's a flat he also needs to consider any costs for the ongoing maintenance of the building and the service charges - depending on the size and state of the block there can be some hefty bills floating around. If there's cladding issues then buying would probably be a very expensive idea. Just some other things he needs to think about. 

With regards to your specific query I don't think there is a disregard for an inheritance. There is if you sell a property and are buying another one elsewhere but not for inheritance. So he will need to declare it straight away when he gets the money.
Inheritance and benefits | Disability charity Scope UK

[Deleted User]

comeandgo said:

Who is advising him to do this?  It is an extremely bad idea.  He will have to pay for upkeep of property and insurance which he does not do now and I’m assuming his rent is at least partly paid?  

I think it's just friends and family, not anyone working at the drop-in. He's aware of building insurance and thinks he can manage; I'm not sure about upkeep; does a service charge not take care of that - if the council are his landlord?

[Deleted User]

whizzywoo said:

He is saying that with the 70% discount he could buy it outright so no mortgage would be needed.

Many people can and do own their own properties when living on benefits, whether mortgaged or not.  

With careful management it is possible.  I speak from personal experience. 

Thanks, whizzywoo. Was your property leasehold, and was there a service charge, if you don't mind me asking?

elsien

ETA - presuming he is in England/Wales and not Scotland. 
It's a flat. There will be a service charge. 

Service charges cover all the services the landlord provides including maintenance and repairs of communal areas, insurance of the building (as opposed to his own contents insurance) and, in some cases, provision of central heating, lifts, estate staff, lighting and cleaning of common areas etc.  
He needs to check the lease to see what is chargeable and what isn't. for his specific property. The general annual costs will be known and can be planned for; it tends to get expensive if there's future maintenance work on the horizon, or unexpected emergency costs. 
He needs to ask the council what the current and future service charges are likely to be, whether there is a reserve/sinking fund, and what plans there are for major works that could affect the service charge in the next few years if he does buy.

[Deleted User]

calcotti said:

He cannot be receiving Universal Credit and Housing Benefit, the help with rent will be part of UC. 

When he receives the money he will no longer be entitled to any of the existing benefits other than PIP.

If he then uses the money to fund a property purchase he can reapply for benefits. 

However I agree with others that purchasing a property may not be appropriate.

When the UC stops due to the inheritance he could apply for new style ESA which will allow him to continue to get NI credits for Incapacity for Work even though he will not be paid anything.

Yes, I think by 'Housing Benefit' he means the rent part of his UC. He's aware that he won't be entitled to benefits other than PIP when he gets his inheritance but will he be definitely have to come off and then reapply for benefits, even if the purchase takes place soon after he receives his inheritance? I don't know about new style ESA but I will mention it to him.

[Deleted User]

lisyloo said:

The main issue I think is the upkeep and insurance.
houses can be expensive to maintain e.g. new roof.
the fact that some people have done it and succeeded does not mean it’s a good idea as something could go wrong with this house.
so how will he pay for ongoing upkeep of the building? This is normally covered by the rent.

I think he said he can manage building insurance. I don't know about new roofs etc (would that be covered by a service charge, to his landlord, the council); so, a fixed amount, rather than nasty surprises?