Will my Universal credit be affected if I rent out granny annex?

Fudgecake747

I’m currently in a rented property that I plan to buy from my landlady, there is a separate granny annex with separate council tax and separate bills for. As it was used for rent also. But with the house sale, the annex is included in the sale. I’m thinking of renting the annex to my sibling, so that it isn’t wasted. And just wondered if this would affect my universal credit top up, that i currently receive. My sibling is on disability money. 

Thank you 

Spoonie_Turtle

Receiving rent for it will just count as capital for UC, not income.  Would only affect your UC if you save the rent money and you have over £6,000 in savings.

The annexe potentially being a separate property could cause problems - if it is classed as a separate property then it will count as capital, and if it's worth over £16,000 you would not be eligible for UC.

huckster

Agree you need to sort out the annexe being registered as separate, when you go through the purchase process for the reason stated by Spoonie.

Should be no reason why the current owner cannot restore to one registered property, as part of the sale to you. Other prospective buyers will be wanting this as they won't want 2 properties subject to Council Tax.

And if you then buy the property with annexe as one property, you sibling will just be an other adult person living you. And any money they paid you as rent would just he part of your money, savings and investment I.e. capital.

HillStreetBlues

OP  can you confirm is it two properties or one that you buying in the sale?

huckster

I think it is one property on land registry, but is registered with local council as 2 separate units for Council Tax purposes only.  OP will need to check this to make sure.

HillStreetBlues

huckster said:

I think it is one property on land registry, but is registered with local council as 2 separate units for Council Tax purposes only.  OP will need to check this to make sure.

That's standard, so for UC it's one property.

Grumpy_chap

Fudgecake747 said:

I’m currently in a rented property that I plan to buy from my landlady, there is a separate granny annex with separate council tax and separate bills for. As it was used for rent also. But with the house sale, the annex is included in the sale. I’m thinking of renting the annex to my sibling, so that it isn’t wasted. And just wondered if this would affect my universal credit top up, that i currently receive. My sibling is on disability money. 

Thank you 

My initial thought was that the annex would be classed as capital (which seems to align with S_T's comment), whether rented out or not.  However, HSB has commented contrary to this.

If your sibling is renting as a lodger, then AIUI this income will be disregarded.  I am not sure whether your sibling being a close family member precludes them from being a lodger.  I'd consider that a sibling is, usually, non-dependent family member.  

Spoonie_Turtle

Grumpy_chap said:

Fudgecake747 said:

I’m currently in a rented property that I plan to buy from my landlady, there is a separate granny annex with separate council tax and separate bills for. As it was used for rent also. But with the house sale, the annex is included in the sale. I’m thinking of renting the annex to my sibling, so that it isn’t wasted. And just wondered if this would affect my universal credit top up, that i currently receive. My sibling is on disability money. 

Thank you 

My initial thought was that the annex would be classed as capital (which seems to align with S_T's comment), whether rented out or not.  However, HSB has commented contrary to this.

If your sibling is renting as a lodger, then AIUI this income will be disregarded.  I am not sure whether your sibling being a close family member precludes them from being a lodger.  I'd consider that a sibling is, usually, non-dependent family member.  

I truly don't know the definitions/what's classed as one or two properties so just raised it as a possibility.  I defer to the members who commented afterwards who are far more knowledgeable than I!

In terms of being a lodger, the family relationship between them wouldn't affect OP's UC.  They won't be claiming any housing costs so no non-dependant deduction.  It would just mean sibling couldn't claim any help for paying rent as a lodger, and we know nothing concrete about sibling's financial / benefits situation to be able to say anything more than that.

Grumpelstiltskin

Fudgecake747 said:

I’m currently in a rented property that I plan to buy from my landlady, there is a separate granny annex with separate council tax and separate bills for. As it was used for rent also. But with the house sale, the annex is included in the sale. I’m thinking of renting the annex to my sibling, so that it isn’t wasted. And just wondered if this would affect my universal credit top up, that i currently receive. My sibling is on disability money. 

Thank you 

Can I ask if you are in receipt of UC where are you getting the money from to buy the house? i guess it will cost more than £16K