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

elsien

[Deleted User] said:

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?

See my previous post. Whether it's fixed and what it covers is determined by the lease. 

molerat

A lot depends on how big the block is.  The service charge is usually only enough to cover the basic maintenance.  New roof, new lift, painting / repairing the whole outside of the block, new windows and other major works are often charged separately and can be billed at several £K per flat.  On a high rise the cost of just scaffolding can be eye watering.

whizzywoo

[Deleted User] said:

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?

My property is freehold and there are no service charges.  We bought the house nearly 37 years ago using a mortgage and when we were both fit and well and didn't need any benefits.

When my husband became disabled, about 20 years ago, things changed.  But with careful management we survived.  Buildings insurance is not very expensive, certainly a lot cheaper than contents insurance.

Yes there may be maintenance costs but I budgeted and put money away monthly for these.  I believe that some maintenance costs are covered by service charges.  It may be possible to claim benefits to cover some service charges or ground rent but I don't know about that.  Obviously a full survey would need to be done to find out if the building has any problems.

About 15 years ago I cashed in my small personal pension and used it to pay off our remaining mortgage.

Just because it was right for us does not mean it is right for your friend and he should get some advice about it.  It may be that family and friends are putting pressure on him with a view to a future inheritance from him for themselves?

comeandgo

whizzywoo said:

[Deleted User] said:

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?

Just because it was right for us does not mean it is right for your friend and he should get some advice about it.  It may be that family and friends are putting pressure on him with a view to a future inheritance from him for themselves?

The pressure from family was what I was alluding to.  There is absolutely no benefit of ownership to your friend, quite the opposite, but he may then be leaving a valuable inheritance to someone.

Grumpy_chap

[Deleted User] said:

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)?

Are you saying the flat would be £100k before the 70% discount is applied?

I read it as £100k after discount the first time, but assume that is incorrect.

calcotti

broganjohn said:..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?

Almost certainly. When he gets the money entitlement ends. CTR would stop instantly. For UC if he received and spent the money within the same UC assessment period then the UC would not be affected. However becoming legally entitled to the inheritance and timing the property purchase to be almost contemporaneous is likely to be difficult. 

calcotti

[Deleted User] said:..would that be covered by a service charge, to his landlord, the council); so, a fixed amount, rather than nasty surprises?

A service charge is not usually a fixed amount and is often reassessed each year and can vary widely depending on work carried out or anticipated to be required.

lisyloo

[Deleted User] said:

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?

Most things would be covered by the service charge.
nasty surprises (like cladding as a very real example) would not be, but I wouldn’t expect anyone to live their life scared of extreme occurences
how will the service charge be covered?

TELLIT01

If the price to the claimant is £100k, where is he finding the additional £67k? 

I would certainly advise getting independant advice on whether or not owning the property would be in his best interest.  As things stand, with an inheritance of £32k he will only be £16k above the limit for claiming UC again.  £16k will be swallowed up very quickly with normal living costs in probably little more than a year to 18 months.  I don't dispute that it is possible to run a property only from benefit payments but it's likely to lead to a hand-to-mouth existence.

My gut feeling is that he would be better off remaining as a council tenant and therefore avoiding the costs involved in the upkeep of a property.

sammyjammy

TELLIT01 said:

If the price to the claimant is £100k, where is he finding the additional £67k? 

I would certainly advise getting independant advice on whether or not owning the property would be in his best interest.  As things stand, with an inheritance of £32k he will only be £16k above the limit for claiming UC again.  £16k will be swallowed up very quickly with normal living costs in probably little more than a year to 18 months.  I don't dispute that it is possible to run a property only from benefit payments but it's likely to lead to a hand-to-mouth existence.

My gut feeling is that he would be better off remaining as a council tenant and therefore avoiding the costs involved in the upkeep of a property.

The assumption being made is that the total value is 100k without the discout