Benefits & Capital query

LCThomas123

Hi
I’m hoping someone may be able to point me in the right direction of where I can get some advice. I am helping a friend who has got some capital in savings (from a house sale), and living in private rented accommodation. They are unable to work due to a number of health conditions that are likely to be life long. Currently they are living off the capital (interest plus dipping into the actual cash). The reason the house was sold was to relocate closer to family and the plan was always to buy again once the house prices come down but this would mean the money is all tied up in property. Who would be the best person to speak to about what benefit entitlements would be available? And does owning your own property (outright, no mortgage) affect your eligibility in any way? 

My concern is if they continue to live off the capital, within the next few years there will not be enough to buy a house near their family in the future and then eventually will require both housing and cost of living support. So I feel it’s better to invest in a property now. Could just do with someone who knows about this to have a chat with so that I can help with accurate information 😊

Alice_Holt

Capital in the house you live in, is disregarded by UC.

Monies from a house sale intended to purchase another home, can in some circumstances also be disregarded.

I would suggest you help your friend get advice / a benefit check from their local advice charity.

Can your friend claim newstyle ESA or PIP (google adviceguide for more info)?

NedS

Alice_Holt said:

Capital in the house you live in, is disregarded by UC.

Monies from a house sale intended to purchase another home, can in some circumstances also be disregarded.

Typically, this will be disregarded for up to 6 months where the claimant can demonstrate they are in the process of trying to purchase another property to live in. I'm not sure how a decision maker would handle a case such as this where the OP states the person in question is waiting for house prices to drop and envisage living off the capital for the next few years. Are they actively looking to purchase a property to live in? Is it reasonable to think they will purchase a property in the next 6 months? I'm not an expert on capital decisions so would want to check the guidance carefully, but this may fall outside the grounds of a disregard.

Alice_Holt

NedS said:

Alice_Holt said:

Capital in the house you live in, is disregarded by UC.

Monies from a house sale intended to purchase another home, can in some circumstances also be disregarded.

Typically, this will be disregarded for up to 6 months where the claimant can demonstrate they are in the process of trying to purchase another property to live in. I'm not sure how a decision maker would handle a case such as this where the OP states the person in question is waiting for house prices to drop and envisage living off the capital for the next few years. Are they actively looking to purchase a property to live in? Is it reasonable to think they will purchase a property in the next 6 months? I'm not an expert on capital decisions so would want to check the guidance carefully, but this may fall outside the grounds of a disregard.

     Yes from the wording of the OP, I'd agree.

      It doesn't seem that the friend could show that he is actively house hunting and the OP doesn't give the time since sale.

Muttleythefrog

As above they may need to seriously think about their plans as house sale proceeds could be disregarded for 6 months (plus extended in some circumstances) for income related benefits purposes where they intend to use the money to buy a new home to live in with those proceeds. If they instead decide to wait until the market changes to reduce home prices they may save themselves some money having lost a lot of potential income (and used up some savings as you note) because of waiting.... they really need a top down look at this situation and benefit entitlements. A home you own and live in would be disregarded for benefits means testing purposes.

Muttleythefrog

Alice_Holt said:

NedS said:

Alice_Holt said:

Capital in the house you live in, is disregarded by UC.

Monies from a house sale intended to purchase another home, can in some circumstances also be disregarded.

Typically, this will be disregarded for up to 6 months where the claimant can demonstrate they are in the process of trying to purchase another property to live in. I'm not sure how a decision maker would handle a case such as this where the OP states the person in question is waiting for house prices to drop and envisage living off the capital for the next few years. Are they actively looking to purchase a property to live in? Is it reasonable to think they will purchase a property in the next 6 months? I'm not an expert on capital decisions so would want to check the guidance carefully, but this may fall outside the grounds of a disregard.

     Yes from the wording of the OP, I'd agree.

      It doesn't seem that the friend could show that he is actively house hunting and the OP doesn't give the time since sale.

Worth noting they may not ask for evidence so if the timescale is still making sense (i.e. recent sale) might still have the option.

Universal Credit seemed to work on the principle with me (later 2021 and 2022 for disregard extension) that what I was reporting was consistent, not improbable and made sense and so duly never requested anything other than my own word for any intentions or financial information or events that occurred (perhaps they're short staffed...lol?). Ironically the only evidence they did suggest I provide was of hardship (highly improbable with a 6 figure bank balance) to get a decision taken more quickly but they escalated it anyway.

calcotti

My instinct is that, as described, the circumstances do not meet the requirements for a disregard because it sounds as if it’s longer than six months since the sale took place.

Should definitely take note of what Alice said. 

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

If it is a long time since he worked he will not be eligible to be paid new style ESA but he can still apply and if found to have limited capability for work he will get NI credits towards his future State Pension. In addition if already assessed for ESA, depending on the outcome, that could increase his UC entitlement from the start of any future claim.
https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/employment-and-support-allowance/

LCThomas123

Thank you everyone this is really helpful information. To fill in a few gaps, they sold their previous house Christmas 2021 with the intention of relocating and purchasing within 3-6 months. However due to ill health this was delayed and with ill health persisting and house prices expected to come down it made sense to just focus on trying to feel well rather than another stressful house move. So from what you’ve suggested I suspect they would need to be able to support themselves financially if they were to buy a house, for at least 6 months before any sort of benefits application could be submitted. The other option is to just continue in rented but eventually the money will run out and ultimately will require full housing and living benefits which is obviously a higher cost to the government so it seems better to at least live in their own home if at all possible. 

Thank you so much for your help!

Muttleythefrog

LCThomas123 said:

Thank you everyone this is really helpful information. To fill in a few gaps, they sold their previous house Christmas 2021 with the intention of relocating and purchasing within 3-6 months. However due to ill health this was delayed and with ill health persisting and house prices expected to come down it made sense to just focus on trying to feel well rather than another stressful house move. So from what you’ve suggested I suspect they would need to be able to support themselves financially if they were to buy a house, for at least 6 months before any sort of benefits application could be submitted. The other option is to just continue in rented but eventually the money will run out and ultimately will require full housing and living benefits which is obviously a higher cost to the government so it seems better to at least live in their own home if at all possible. 

Thank you so much for your help!

Just to clarify... if they were to eventually buy a home then, aside from any non means tested benefits he could be getting anyway, means tested benefits would ignore that property as far as means is concerned and so with it the money they used to buy it..... so in theory would be entitled to income related benefits like Universal Credit if less than £16k savings at that time.

Advice around the time of sale may have been useful regarding benefits and potential disregards (i.e. where in calculation of savings held some is not counted)... and that's where the 6 months (potentially which could have been extended if for example a purchase was waiting to complete) would have been relevant as the capital could have been disregarded if they intended to use it to buy another home to live in.

Sound advice I imagine would be to buy sooner rather than later.... while house prices may well go down a bit their savings surely will too in the meantime especially with rent etc.

LCThomas123

This is very helpful thank you. This was my feeling too, that the money will only go down until it’s used to buy a property. They just need to make sure they can afford to live in the short term until they can hopefully work again.
Thank you! I shall relay this all to my friend 

Spoonie_Turtle

LCThomas123 said:

 I suspect they would need to be able to support themselves financially if they were to buy a house, for at least 6 months before any sort of benefits application could be submitted. 

Just to pick up on this point, from a benefits point of view this is not necessary at all - they can claim as soon as their savings dip below £16,000.  (There would be a proportional reduction for anything over £6,000.)


Your friend should certainly look into claiming disability benefits as previously advised.  PIP and ESA (if eligible - although they could claim just for NI credits if their contributions record doesn't qualify then for payments, their their work capability assessment would count for UC when they come to claim it) are not means-tested so no need to wait.