Universal Credit and buying property

AdviceSeeker222

Hi,

I'm on Universal Credit due to a long-term injury. My parents gifted me funds to purchase property to try to help. 
Not realising that this would affect my eligibility, I purchased property to let and continue to live in a rented flat. 
The purchase has recently completed and DWP informed me that my UC payments have been frozen with immediate affect despite the fact that I've not received any earnings from it yet because they treat buy-to-let as capital (I wrongly through that I would just need to declare any earnings when I receive them). 
I have been told that there could be a way for me to continue to be eligible for UC if I change the way the funds from my parents were gifted. 
Is there something in this? Is there a way to change the gifting status so that I can continue to receive UC and just declare earnings?

Thank you

sevenhills

When you were gifted the £100,000+ you would not be able to claim UC!

"If you have capital/ savings over £16,000 as a single claimant or as a couple you will not be entitled to Universal Credit. Some capital can be ignored when working out if you are entitled to Universal Credit."

https://www.turn2us.org.uk/get-support/information-for-your-situation/universal-credit-uc-income-and-capital/universal-credit-uc-capital-savings

Muttleythefrog

Normally only the property you live in is disregarded as capital... although unusually in this case you don't own it while you do own another property. I am surprised a little at the advice you've received as I'm not sure in this case it will make any difference... a decision maker presumably would have to disregard the property you own (purchased with gifted savings you should have reported to UC). Be interested in seeing what others say on this. Who gave you the advice on changing the details of the gift.. I presume not a decision maker at UC.. because to my mind even if it was specifically gifted to you to buy a property that property would still have to be disregarded as capital and since you don't live in it then I am not sure it can be.

HillStreetBlues

There are  two issues  1) you were gifted a large sum of money 2) you have a property you own but do not live in.
1) Normally once the money hits your account UC ends because of capital.  What would have been the best was was to have a "gifted deposit" and your parents pay direct. If they do try and claim back UC when you first had the money in your account, you could claim the money was a "gifted deposit" and although money was in your account you never had any beneficial interest in it as it had to be used as a deposit. A letter supporting that from your parents would be needed.
2) Once property has been bought, as there is capital over £16k then as I see it UC will end.

For anyone who wants to stay on UC large gifts of money is never a good idea.

Rubyroobs

The issue isn't that you haven't received any money from renting it out. The issue is that you have over 16k in assets in a property you don't live in which therefore means you no longer qualify to receive any UC. They would have been better to purchase it in their names rather than yours but I guess it's too late now.

HillStreetBlues

If property was purchased without a restricting mortgage (eg not a buy to let)  then if it works out better  you could move into the property you bought  and then claim UC (if capital under £16k).

Alice_Holt

AdviceSeeker222 said:

Hi,

I'm on Universal Credit due to a long-term injury. My parents gifted me funds to purchase property to try to help. 
Not realising that this would affect my eligibility, I purchased property to let and continue to live in a rented flat. 
The purchase has recently completed and DWP informed me that my UC payments have been frozen with immediate affect despite the fact that I've not received any earnings from it yet because they treat buy-to-let as capital (I wrongly through that I would just need to declare any earnings when I receive them). 
I have been told that there could be a way for me to continue to be eligible for UC if I change the way the funds from my parents were gifted. 
Is there something in this? Is there a way to change the gifting status so that I can continue to receive UC and just declare earnings?

Thank you

   The only way that UC could possibly be reinstated is if you occupy the property you own.

   There is no way to retrospectively change the gifting status. 

   Rental income is not treated as earnings for UC, it is added to capital. 
   If the capital in the property you own (but do not live in) is greater than £16k (which clearly it is) then you have no eligibility for UC.  Neither will you have any eligibility for Council Tax reduction in the property you rent and live in. 
These means-tested benefits are meant as a safety net. Being gifted a substantial sum and still claiming means-tested benefits is (rightly) not a possibility. 

  If you were receiving UC after your parents gifted you the funds, and did not tell UC about this fact - then you have been overpaid UC and will have to repay all the UC you received in the assessment periods when you had more than £16k in savings.

  It's a real shame that you didn't spend some time to understand how UC works and your responsibilities as a UC claimant. 

HillStreetBlues

Alice_Holt said:

  It's a real shame that you didn't spend some time to understand how UC works and your responsibilities as a UC claimant. 

Totally agree.
It's such a pity when people come for help after the fact, looking for help for a problem that can't really be solved the way they want it.

poppy12345

Alice_Holt said:

AdviceSeeker222 said:

Hi,

I'm on Universal Credit due to a long-term injury. My parents gifted me funds to purchase property to try to help. 
Not realising that this would affect my eligibility, I purchased property to let and continue to live in a rented flat. 
The purchase has recently completed and DWP informed me that my UC payments have been frozen with immediate affect despite the fact that I've not received any earnings from it yet because they treat buy-to-let as capital (I wrongly through that I would just need to declare any earnings when I receive them). 
I have been told that there could be a way for me to continue to be eligible for UC if I change the way the funds from my parents were gifted. 
Is there something in this? Is there a way to change the gifting status so that I can continue to receive UC and just declare earnings?

Thank you

 

  It's a real shame that you didn't spend some time to understand how UC works and your responsibilities as a UC claimant. 

Agreed and the worst thing now is they will have an overpayment from the assessment period when they received the gift. This will need to be repaid back.

HillStreetBlues

poppy12345 said:

Alice_Holt said:

AdviceSeeker222 said:

Hi,

I'm on Universal Credit due to a long-term injury. My parents gifted me funds to purchase property to try to help. 
Not realising that this would affect my eligibility, I purchased property to let and continue to live in a rented flat. 
The purchase has recently completed and DWP informed me that my UC payments have been frozen with immediate affect despite the fact that I've not received any earnings from it yet because they treat buy-to-let as capital (I wrongly through that I would just need to declare any earnings when I receive them). 
I have been told that there could be a way for me to continue to be eligible for UC if I change the way the funds from my parents were gifted. 
Is there something in this? Is there a way to change the gifting status so that I can continue to receive UC and just declare earnings?

Thank you

 

  It's a real shame that you didn't spend some time to understand how UC works and your responsibilities as a UC claimant. 

Agreed and the worst thing now is they will have an overpayment from the assessment period when they received the gift. This will need to be repaid back.

Been thinking about this one (couldn't think if the term before)
As the gift was to purchase property if that was the condition set  by the OP's family that the money had to be used in that way  it could be classed as  Quistclose trust. It would not become the OP's money until converted into property as if not converted then the OP would need to return the money.

A ruling was made on a Quistclose trust here
https://www.gov.uk/administrative-appeals-tribunal-decisions/vmcc-v-secretary-of-state-for-work-and-pensions-is-2018-ukut-63-aac

So the OP can claim they were the legal owner of the money but not the beneficial owner.
But once converted then the UC would end.