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

[Deleted User]

sammyjammy said:

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

The price to the claimant will be around £30k (£100k minus the 70% discount). And he's hoping the costs of upkeep won't be huge but we have urged him to look into it in detail. 

[Deleted User]

lisyloo said:

[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?

He's hoping to pay the service charge from his benefits.

elsien

[Deleted User] said:

LateNightHunter said:

AFIAK, as soon as the inheritance hits, he'll lose his benefits until his holdings/savings drop below £10k I think?

How will the DWP know about his inheritance (before he buys the flat; he's planning on telling them afterwards when he tells them he no longer requires Housing Benefit)?

He could end up owing a large amount back to them.  And being investigated for fraud. DWP do match up records. 

I had a client whose mother was getting a payment for him from her dead husband’s  pension. He didn’t know the payment was in his name as she was his appointee and didn’t declare it. DWP came calling 20 odd years later, seeking clarification and asking questions after a discrepancy in tax records was noted. 

poppy12345

[Deleted User] said:

lisyloo said:

[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?

He's hoping to pay the service charge from his benefits; he's also got a small pension for emergencies (accesible around a year from now).

If he's claiming UC then any weekly/monthly pension he receives will reduce it £1 for £1, therefore, it's pointless accessing any pension early for this reason.

calcotti

poppy12345 said: If he's claiming UC then any weekly/monthly pension he receives will reduce it £1 for £1, therefore, it's pointless accessing any pension early for this reason. 

But they could take an ad hoc lump sum for emergencies, if required.

[Deleted User]

molerat said:

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.

I'll advise him to look into all of this. 

[Deleted User]

calcotti said:

[Deleted User] 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. 

 Regards the same assessment period could you elaborate on that please?

calcotti

[Deleted User] said:
Regards the same assessment period could you elaborate on that please?

An assessment period (AP) is the monthly period for which UC payment is payable. The amount payable is determined by the claimant's circumstances on the last day of the AP. Therefore if money is received after the start of the AP but spent before the end of the AP it has no impact.

[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?  

Friends, family and a few people at the drop-in are advising him to do it. They've made him aware of upkeep and insurance which he reckons he can manage. His rent his paid at the moment, but he will inform the DWP that he no longer requires this if he does end up buying.

[Deleted User]

elsien said:

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.
(scope link)

Thanks, elsien. Your link linked to Turn2us which said, "A property that you own and do not live in usually counts as capital for benefits." He will be living in the property; will that make it ok?