Can we buy a house whilst receiving benefit?

JustMum89

Hi, 

Background is my partner works full time.  We receive UC, child benefit, PIP (for myself) and both of our children 14 and 11 have entitlement to DLA. I do not work due to disability. 

Over the course of the last 2 years we have managed to save £11,000. (I know benefits aren't designed for people to save but please keep judgement to yourself.  We could easily have spent this on unnecessary items but instead chose to be frugal and save) This has all been declared to UC and as such our benefit is reduced monthly by £4.35 for every £250 over £6000 meaning they keep back £87. 

We would very much like to buy a house and use the £11,000 as a 5% deposit to secure a mortgage with payments that are  slightly more than our current rent amount. Mortgage payment would be £899 and rent is currently £850. 

We do not claim anything we are not entitled to.  Partners wages are put through the automated system.  As part of our UC calculation there is a housing allowance which we are aware we will lose.  With this loss we would still be able to pay the mortgage payments and other household bills. 

My question is, if we use the £11,000 to buy a house and are happy to receive the lower UC amount once the housing allowance has been removed, would this be seen as deprivation of capital? Would we lose our entire UC allowance? Or have to continue the £87 reduction for savings along with the removal of housing allowance? 

poppy12345

I can't see that this would be deprivation of capital but it would be down to a decision maker to make the final decision. If it was then you wouldn't lose your entire UC, it would just be the £87 that is currently deducted. Your work allowance would increase to £573 if you didn't claim for help with any rent.

Life__Goes__On

I believe under UC this was sort out and you can buy a house.
The reason is
A disabled person in more likely to be on UC than a non-disabled person (doesn't mean all disabled people are on UC and all non-disabled are not)

Will use a general example.

If a disabled couple on UC wanted to buy a house and lost UC because of this, then they would be disadvantage compared to a non-disabled couple who don't claim UC. Basically stopping many disabled people owning their own home.
This is  classed  discrimination, as the disabled couple (or person) are disadvantaged.

TELLIT01

I have never known using money to purchase a home which will be used as the primary residence to be treated as deprivation of capital.  Let UC know once the money has been used so they can adjust the payment accordingly.  You will lose the housing element but the base figure will go up due to the reduction in savings to below £6k.

calcotti

For it to be deprivation of capital a primary motivating purpose has to be to increase benefit entitlement. Buying a house is clearly not going to result in that so logically it can't be deprivation of capital.

poppy12345

Life__Goes__On said:

I believe under UC this was sort out and you can buy a house.
The reason is
A disabled person in more likely to be on UC than a non-disabled person (doesn't mean all disabled people are on UC and all non-disabled are not)

Will use a general example.

If a disabled couple on UC wanted to buy a house and lost UC because of this, then they would be disadvantage compared to a non-disabled couple who don't claim UC. Basically stopping many disabled people owning their own home.
This is  classed  discrimination, as the disabled couple (or person) are disadvantaged.

I don't think that's correct and has nothing at all to do with deprivation of capital.

NedS

calcotti said:

For it to be deprivation of capital a primary motivating purpose has to be to increase benefit entitlement. Buying a house is clearly not going to result in that so logically it can't be deprivation of capital.

Technically, it could be as if someone had £200,000 in the bank and rented, they would have no entitlement to UC. If they purchased a house costing £200,000, they would then be able to claim personal and other elements (child, carers, LCWRA etc) of UC albeit without the housing element.

But I agree, it is very unlikely that purchasing a house would be deemed deprivation of capital, other than in extreme circumstances (Lotto winner buys a multi-million pound mansion with swimming pool and then claims UC).

NedS

JustMum89 said:

Hi, 

Background is my partner works full time.  We receive UC, child benefit, PIP (for myself) and both of our children 14 and 11 have entitlement to DLA. I do not work due to disability. 

Over the course of the last 2 years we have managed to save £11,000. (I know benefits aren't designed for people to save but please keep judgement to yourself.  We could easily have spent this on unnecessary items but instead chose to be frugal and save) This has all been declared to UC and as such our benefit is reduced monthly by £4.35 for every £250 over £6000 meaning they keep back £87. 

We would very much like to buy a house and use the £11,000 as a 5% deposit to secure a mortgage with payments that are  slightly more than our current rent amount. Mortgage payment would be £899 and rent is currently £850. 

We do not claim anything we are not entitled to.  Partners wages are put through the automated system.  As part of our UC calculation there is a housing allowance which we are aware we will lose.  With this loss we would still be able to pay the mortgage payments and other household bills. 

My question is, if we use the £11,000 to buy a house and are happy to receive the lower UC amount once the housing allowance has been removed, would this be seen as deprivation of capital? Would we lose our entire UC allowance? Or have to continue the £87 reduction for savings along with the removal of housing allowance? 

Well, I'm going to break a forum rule (sorry) and judge you - WELL DONE! I think it's absolutely fabulous that you have been able to save enough for a deposit by taking a prudent approach to your spending and are now in a position to purchase a property. Good luck!

TELLIT01 said:

I have never known using money to purchase a home which will be used as the primary residence to be treated as deprivation of capital.  Let UC know once the money has been used so they can adjust the payment accordingly.  You will lose the housing element but the base figure will go up due to the reduction in savings to below £6k.

I agree, not going to be an issue in this case.

calcotti

NedS said:

calcotti said:

For it to be deprivation of capital a primary motivating purpose has to be to increase benefit entitlement. Buying a house is clearly not going to result in that so logically it can't be deprivation of capital.

Technically, it could be as if someone had £200,000 in the bank and rented, they would have no entitlement to UC. If they purchased a house costing £200,000, they would then be able to claim personal and other elements (child, carers, LCWRA etc) of UC albeit without the housing element.

I was looking at it from the point of OP who is already on UC. Buying a house will reduce their entitlement because they will lose the housing entitlement. 

pumpkin60

 Interest rates are starting to rise so I would think carefully if you could still afford a mortgage if the rates rise significantly.

NedS

calcotti said:

NedS said:

calcotti said:

For it to be deprivation of capital a primary motivating purpose has to be to increase benefit entitlement. Buying a house is clearly not going to result in that so logically it can't be deprivation of capital.

Technically, it could be as if someone had £200,000 in the bank and rented, they would have no entitlement to UC. If they purchased a house costing £200,000, they would then be able to claim personal and other elements (child, carers, LCWRA etc) of UC albeit without the housing element.

I was looking at it from the point of OP who is already on UC. Buying a house will reduce their entitlement because they will lose the housing entitlement. 

Yep, quite right. My mind has an annoying habit of spotting all the weird corner cases of any scenario