Shared ownership or private rental

KJS1234

I'm looking for advice on what to do after separating from my husband and selling our house. 

We have only just sold STC so will be a couple of months at least until completion but I am so stuck with what I should do now. I have been claiming UC since we separated 8 months ago, and when the house sale goes through I will receive a decent chunk of money from the equity (around 25-30000).

I plan to pay off my car loan and some credit card debt, but other than that was hoping to put the money down as a deposit and buy a shared ownership home. However I've spoken to a mortgage advisor and crunched some numbers and I just don't think I'll have the affordability to get a mortgage by myself in my current circumstances. I've also looked into rental and the budget is incredibly tight for that as well, with most rents costing more than the combined mortgage and rent of the shared ownership option.

I will be entitled to additional UC for housing once I leave my married home, which will cover the full rental portion of the shared ownership home, or around 65-75% of the private rental cost. Neither option is looking very affordable, although private rental will see me slightly better off, but with the dilemma that I will have to come off UC and spend the money from the house on living.

I am desperately looking for work to get more hours to try to make the affordability up, but I feel like I'm really short on time knowing that as soon as I get that money the clock is ticking to either buy a home, or use it to pay for daily expenses. Most rentals I've seen have a minimum term of 12 months, so if I was to sign a contract on a rental, I will overrun the 6 month discretionary period to put the money into a permanent place to live.

I was just wondering if anyone has any suggestions for what steps I could take going forward?Just a bit of background as well, we have a two year old son who we haven't figured out living arrangements for yet, but my ex is paying me maintenance as he earns a lot more than me.

HillStreetBlues

The issue I see is that the money is disregarded only if it's going to be used to purchase a new home. So you might have to show that intention and show that intention is based on facts. If your current situation is that you can not afford to buy then a Decision Maker can reject the disregard as you can not state it is to be used to buy a new home, only hope to be used.

The DM guide https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf
H2119 Where a person has received an amount within the past 6 months which is to be used to purchase
premises that the person intend to occupy as their home, that amount can be disregarded from the
calculation of that person’s capital where it

KJS1234

@HillStreetBlues Thanks for your reply, that's helpful to know. So If I'm able to try and improve affordability and get the wheels in motion before our sale completes I may be ok. I would assume if I've applied for shared ownership and/or have a mortgage in principle then that would be proof of intention.

It also states in the document you've provided:
"H2110 In the disregards described below that specify a period of 6 months, that period may be extended where it is reasonable in the circumstances of the case"

I'd be curious if 'reasonable circumstances' would include that you're not currently eligible for a mortgage but have been advised you could be in the near future. I'm just thinking the mortgage advisor I spoke to said there could be another lender that would be feasible but they need 6 months of payslips and I only currently have 3 from starting a new job.

HillStreetBlues

KJS1234 said:

@HillStreetBlues Thanks for your reply, that's helpful to know. So If I'm able to try and improve affordability and get the wheels in motion before our sale completes I may be ok. I would assume if I've applied for shared ownership and/or have a mortgage in principle then that would be proof of intention.

It also states in the document you've provided:
"H2110 In the disregards described below that specify a period of 6 months, that period may be extended where it is reasonable in the circumstances of the case"

I'd be curious if 'reasonable circumstances' would include that you're not currently eligible for a mortgage but have been advised you could be in the near future. I'm just thinking the mortgage advisor I spoke to said there could be another lender that would be feasible but they need 6 months of payslips and I only currently have 3 from starting a new job.

With H2110 is about it being extended, but you would have to have the disregard in place first (you can't extend something you haven't got).

Whatever happens I would certainly apply for a disregard, and submit everything that supports why you should get it,  I'm not saying you will not get one, but don't want you to think it's certain you will get one.
UC along with other income related benefits isn't friendly for those who do want to buy a home.

HillStreetBlues

On a septate issue have you checked the LHA  rates for private rentals?  as if the money is  disregarded  that's  the maximum you could get.

KJS1234

HillStreetBlues said:

UC along with other income related benefits isn't friendly for those who do want to buy a home.

I'm beginning to realise that! I'll be honest this is all completely new to me and I didn't even realise I would have to apply for a disregard. I just assumed naively if I declare the money and say I intend to buy a house with it, that would be it.

It feels somewhat like a poverty trap that the government would rather I use a sum of money in the short term on living costs, only to pay me more benefits for housing in the long term. If I'm not able to put this money into another property then I most likely will never have the opportunity again.

Thanks for your help, I will apply when the time comes and see what they say. 

HillStreetBlues said:

On a septate issue have you checked the LHA  rates for private rentals?  as if the money is  disregarded  that's  the maximum you could get.

Do you mean the UC housing portion? The max is £650 and local rents for a 2 bed are about £850 upward.

HillStreetBlues

Yes, the current LHA are ridiculously low.
The Institute for Fiscal Studies said that only 5% of private rental properties listed for rent on Zoopla in the first quarter of this year would be covered by LHA
And having moved not that long ago I know the standard of the lowest price properties.