Universal credit and mesher orders

youlookoktome

Hello. I hope someone can help.

I claim Universal Credit (LCWRA) and am in the middle of a divorce. The plan was to place a mesher order on the house for the next few years until our child leaves school.

At the moment the house as classed as capital for me because my name’s still on the mortgage and I’m not living there. Would it be classed as capital still with a mesher order?

Any help really appreciated, thank you.

Alice_Holt

https://assets.publishing.service.gov.uk/media/654111fb1f1a60000d360b54/admh2.pdf

"H2114 -   Where a person has ceased to occupy premises as their home following estrangement from their former partner, those premises can be disregarded from the calculation of that person’s capital where
 1. the person has ceased to occupy those premises within the past 6 months or
2. the person’s former partner is a lone parent and occupies the premises as their home

 Note: The disregard in 2 applies for as long as the conditions are satisfied and is not restricted to 6 months."


https://www.legislation.gov.uk/uksi/2013/376/schedule/10

youlookoktome

Alice_Holt said:

"H2114 -   Where a person has ceased to occupy premises as their home following estrangement from their former partner, those premises can be disregarded from the calculation of that person’s capital where
 1. the person has ceased to occupy those premises within the past 6 months or
2. the person’s former partner is a lone parent and occupies the premises as their home

 Note: The disregard in 2 applies for as long as the conditions are satisfied and is not restricted to 6 months."

Thank you. My ex isn’t classed as a lone parent so this won’t apply.

kaMelo

As you're not the one living there why would you want a mesher order?

youlookoktome

kaMelo said:

As you're not the one living there why would you want a mesher order?

It’s more what my ex wants. Selling now would incur big fees and leave us with barely anything. My ex can’t afford to buy me out now so it was advised as the best idea financially and to give our child a degree of stability when they do visit. Mediation advised it was the best route but now I’ve seen conflicting info I’m not sure if they were totally clued up on benefits when they advised 

peteuk

So you've got to weight this up,  sadly what’s best for your ex isn’t always best for you and visa versa.

Reading the rules the property will be disregarded for 6 months, this can be extended if your planning to sale (eg awaiting completion) If you claim UC as a single claimant then once the property disregard then should you have more than £16K in capital then you claim will end. 

 get selling now will have an impact and potential mortgage fees but how much will you get from the sale of the house and where would that put you with regards the £16K capital limit for claiming UC?

HillStreetBlues

youlookoktome said:

It’s more what my ex wants. Selling now would incur big fees and leave us with barely anything. My ex can’t afford to buy me out now so it was advised as the best idea financially and to give our child a degree of stability when they do visit. Mediation advised it was the best route but now I’ve seen conflicting info I’m not sure if they were totally clued up on benefits when they advised 

50% of what remains would be your capital in the property. So if all that's left is £20k  than £10k is your capital

youlookoktome

peteuk said:

So you've got to weight this up,  sadly what’s best for your ex isn’t always best for you and visa versa.

Reading the rules the property will be disregarded for 6 months, this can be extended if your planning to sale (eg awaiting completion) If you claim UC as a single claimant then once the property disregard then should you have more than £16K in capital then you claim will end. 

 get selling now will have an impact and potential mortgage fees but how much will you get from the sale of the house and where would that put you with regards the £16K capital limit for claiming UC?

If it would work for everyone then it would be the sensible option and mean the little equity there is wouldn’t get eaten by fees etc. It would also mean less stress of more battles. But if it doesn’t then it it’ll have to be sold, of course. They work so will be able to use their half towards another mortgage so would be fine. The sale would put me over the £16k threshold I think so would have to live off that and reopen my claim once it runs out?

kaMelo

youlookoktome said:

kaMelo said:

As you're not the one living there why would you want a mesher order?

It’s more what my ex wants. Selling now would incur big fees and leave us with barely anything. My ex can’t afford to buy me out now so it was advised as the best idea financially and to give our child a degree of stability when they do visit. Mediation advised it was the best route but now I’ve seen conflicting info I’m not sure if they were totally clued up on benefits when they advised 

A mesher order does provide stability for a child but that is usually because the resident parent and child live in the home subject to the mesher order, it's unusual for the non resident parent to reside there.  Circumstances will dictate whether it's appropriate or not but it's important to understand everything especially the long term implications such as being financially tied to your ex until the trigger event to sell the home occurs.  This can be more impactful on the non resident than the resident.

Then there is the impact upon any potential benefit claim. A mesher order doesn't change anything in respect of ownership so I don't see how the home wouldn't continue to be classed as capital as not selling it is a choice. The only exceptions to this being those listed above by @Alice_Holt which you've confirmed don't apply.

It's obviously your call what to do but think carefully first.  Doing right by your ex doesn't necessarily equal doing right for yourself and your child.

youlookoktome

kaMelo said:

youlookoktome said:

kaMelo said:

As you're not the one living there why would you want a mesher order?

It’s more what my ex wants. Selling now would incur big fees and leave us with barely anything. My ex can’t afford to buy me out now so it was advised as the best idea financially and to give our child a degree of stability when they do visit. Mediation advised it was the best route but now I’ve seen conflicting info I’m not sure if they were totally clued up on benefits when they advised 

A mesher order does provide stability for a child but that is usually because the resident parent and child live in the home subject to the mesher order, it's unusual for the non resident parent to reside there.  Circumstances will dictate whether it's appropriate or not but it's important to understand everything especially the long term implications such as being financially tied to your ex until the trigger event to sell the home occurs.  This can be more impactful on the non resident than the resident.

Then there is the impact upon any potential benefit claim. A mesher order doesn't change anything in respect of ownership so I don't see how the home wouldn't continue to be classed as capital as not selling it is a choice. The only exceptions to this being those listed above by @Alice_Holt which you've confirmed don't apply.

It's obviously your call what to do but think carefully first.  Doing right by your ex doesn't necessarily equal doing right for yourself and your child.

That makes sense. Ultimately if it leaves me with nothing it’s absolutely not the right call for anyone. I think the guy who advised us was working on the principle that it couldn’t count as capital as it would be inaccessible. Which makes some kind of sense but I do see how it could also be deemed as retaining the capital in a round about way, even if that’s absolutely not the intention. It’s so hard to find someone who knows what’s what about benefits as well as everything else.

ChaseBear89

Hi OP, was wondering if you got a response for this? In similar situation except my name is not on the mortgage, I'm just being granted 60% equity in the house once divorce is final however there will be a mesher order for 4 years as my ex will either sell or remortgage it then.