UC & 2nd home help please

169flynn

So I became unwell and gave up work in 2020. I am 59. I claimed UC some time after that. 

I live in my home which has a mortgage.
 I have a 2nd property with an interest only mortgage that had been in negative equity until recently. I rent out that property to cover the mortgage, leasehold fees, insurance, heating cover and all repairs and renewals. I don’t make any income from it as all rent is spent on overheads and repairs and renewal. 

I had the property up for sale when I claimed as it had increased value enough to cover mortgage & seller fees. Then covid hit. 

UC have now ask me to fill in the form A64A which is now with decision makers - who have a big backlog - so I’m in limbo. I owe £70k mortgage & at best it’ll sell for £90k 

I have a son who is autistic and has learning difficulties and I wanted to put this property in trust for him… but not got round to it. I’m worried if I do it now they will think I’m being dishonest- it’s actually due to my health that lots of my affairs have been overlooked. 

I don’t believe there is more than 16k capital in it after fees etc. 

Can anyone advise me if the rent will taken into account before the overheads eg mortgage, lease/communal fee, insurance etc. I’ve included all details of this in the form. 

I am currently too unwell to go back to my profession or to any employment. I am hopeful that I may be able to too in the future. 

My anxiety is now in overdrive and I could wait months to hear back. I have absolutely no other means of an income if they stop my benefits- I’m already living on a very tight budget. 

Can anyone advise me of the formula that is used for this 2nd mortgage and rent so I can anticipate the outcome? 

Thank you 

HillStreetBlues

How much is the property valued at?  and what mortgage owed is as that's needed to work out the capital
If you put the property in Trust for your son, you are giving it way so you need to be aware of deprivation of capital

EDIT sorry I misread, I see you already supplied that info.
Does the mortgage included all fees that would be payable?

peteuk

Sorry but your autistic/ learning difficulties son has nothing to do with this.  You cant simply put the house in his name (trust or otherwise) now if it had been owned by someone else who then left it to your son that would be a completely different situation. 

Regardless of if you think its less than £16K or not, it comes down to a simple calculation (which is so simple I will get it wrong)

 Market value minus mortgage minus 10% of value (for selling fees). 

So using your figures

90K-70K = 20K.  20K minus 10%= 11K 

So you will still be able to claim UC - unless you have other capital - however as your over the £6K limit of declaration you will have a deduction of £4.35 for every £250 or part of their in over £6K.  I calculate that as £87 deduction. 

This may be back dated if you've failed to declare it previously.

huckster

Where did the £90k valuation come from?

Suggest you get this confirmed,  as Decision Makers may use their own information sources to arrive at a valuation.

ader42

Where on earth does anyone pay 10% of the selling price in sellers fees?
More like 2% in my experience.

HillStreetBlues

ader42 said:

Where on earth does anyone pay 10% of the selling price in sellers fees?
More like 2% in my experience.

They don't have too, the regs allow 10% so that's how it calculated
https://www.legislation.gov.uk/uksi/2013/376/regulation/49