Selling a rental property on Universal Credit

Harry844

Hi, I'm after some advice please. I'm on my first year of universal credit, I own a rental property which puts my assets over the £16k limit but I'm in the transition period so it's disregarded. I'm trying to sell the property but wanted to know if this would affect my claim once the transition period ends. If I spent the money from the property (towards the mortgage on my main house) would I still be ok as I wouldn't have savings over £16k. Or would they look at my finances over the last year and say I wasn't entitled to UC as I'd effectively had a massive income in the past year.

Thanks 

huckster

If you are trying to sell the 2nd property when the transitional period ends, you would declare your circumstances at that time and if money, savings and investments was more £16k, your claim would be closed.

If you sell the 2nd property and pay off some of the mortgage of your main home, then you are allowed to do so, as it is securing your housing position.  Would not be seen as a way of trying to maintain benefit entitlement by paying off a debt early, as it involves the house in which you are living.

Grumpy_chap

Harry844 said:

Hi, I'm after some advice please. I'm on my first year of universal credit, I own a rental property which puts my assets over the £16k limit but I'm in the transition period so it's disregarded. I'm trying to sell the property but wanted to know if this would affect my claim once the transition period ends. If I spent the money from the property (towards the mortgage on my main house) would I still be ok as I wouldn't have savings over £16k. Or would they look at my finances over the last year and say I wasn't entitled to UC as I'd effectively had a massive income in the past year.

Thanks 

As you have noted, the equity in the rental property is disregarded for a year following transition from TC to UC.

Under normal UC rules, repayment of debts is never deprivation of capital.  I am not aware of anything that changes that for those that transitioned from TC.

If you sell the property within the transition year and then repay the mortgage (or other debts), that would appear to be all OK.
Has the tenant vacated?
Is the property currently marketed for sale?

If the property sale does not complete within the transitional period, there may be a further (6 month) disregard possible so long as the property is being actively marketed for sale.

Harry844

Grumpy_chap said:

Harry844 said:

Hi, I'm after some advice please. I'm on my first year of universal credit, I own a rental property which puts my assets over the £16k limit but I'm in the transition period so it's disregarded. I'm trying to sell the property but wanted to know if this would affect my claim once the transition period ends. If I spent the money from the property (towards the mortgage on my main house) would I still be ok as I wouldn't have savings over £16k. Or would they look at my finances over the last year and say I wasn't entitled to UC as I'd effectively had a massive income in the past year.

Thanks 

As you have noted, the equity in the rental property is disregarded for a year following transition from TC to UC.

Under normal UC rules, repayment of debts is never deprivation of capital.  I am not aware of anything that changes that for those that transitioned from TC.

If you sell the property within the transition year and then repay the mortgage (or other debts), that would appear to be all OK.
Has the tenant vacated?
Is the property currently marketed for sale?

If the property sale does not complete within the transitional period, there may be a further (6 month) disregard possible so long as the property is being actively marketed for sale.

Ok, thanks. Is this referenced on the Universal credit website as I've not seen it. Is the 6 months extension for the disregard referenced as well?   I'm in the process of starting an eviction to remove the tenants. I've never kicked a tenant out before and it's a pretty horrible feeling. I can probably get it onto the market before the transition ends but I don't think it will complete by then. So the 6 months extension would be great

sammyjammy

When does your TP end?  Its at that time you need to get agreement from DWP for the property to be ignored as its being sold.  Its not a hard and fast rule, each case is looked at by its merits.

HillStreetBlues

Harry844 said:

Ok, thanks. Is this referenced on the Universal credit website as I've not seen it. Is the 6 months extension for the disregard referenced as well?   I'm in the process of starting an eviction to remove the tenants. I've never kicked a tenant out before and it's a pretty horrible feeling. I can probably get it onto the market before the transition ends but I don't think it will complete by then. So the 6 months extension would be great

The best reference for you in the Decision Makers guide https://assets.publishing.service.gov.uk/media/6798cc97cbd1e3a508a22d5d/admh2.pdf

Premises person is trying to sell
H2115 Where a person is trying to dispose of premises, they can be disregarded from the calculation of that person’s capital where they are taking reasonable steps to dispose of the premises and those steps have been commenced within the last 6 months1 . 1 UC Regs, Sch 10, para 6
Is it reasonable to disregard for longer
H2116 The DM may decide to disregard the premises for a longer period where for example the person has done all they can to sell the premises and the asking price is no more than the premises are worth.