Second home and Universal Credit

Lunasun

Hello,I have question to ask please.I have a second home which we are renting out.We withdraw the money back in 2018 from this property to buy a second home,to move,as we have 4 kids,needed more space.Since 2018 I have never paid any interest on the house,so basically we still owe to the bank huge amount of money.The tenants live in the property,and I can’t sell this home,as I have to pay early repayment charges as well.Plus the area where is this home located are not great,even if we start selling the property due to the high rates who knows how much it will take to sell.
I don’t work as I look after my disabled mother,my partner due to his health condition stopped working since August 2024.He had his health assessment and they declared that he is not fit to work.(UC).
But UC not paying us anything,as they saying that we have capital,the let to buy house is on my name only,and second home is for both of our names.
we have two mortgages to pay,at least tenants helping me to cover the costs.As one home is 2000£per month,and another one is 800£z
rental income is 1500£only.I started to borrow money now.
May I ask you what benefits we are entitled to?
as who knows how long it will take to sell the property,I am sure If I sell I will have more that 16.000 pounds ,from selling it,but my neighbors are selling their property and it’s takes them almost a year to advertise and no one buys as house is not in a good area at all.
How I can come out from this situation please help me with advice,I am devastated,also my partner maybe entitled for different benefits,such as attendance allowance?He takes morphine right now,and of course not able to work,due to his pain.
I have autistic kids ,2 of them,and it sounds like if we sell the property,we will have that money in future,but who is guaranteed that we will have that money,but the main question is when we will?As we need to buy food pay bills now,any advice will be appreciated.
UC are not helpful at all,they keep saying that we are investigating this matter and they need to verify the capital.What they like to verify,it’s clear that we do have second house,yes and we may have some money if we sell,the property,maybe 20-30 k ,depending on market values.But I can not advertise house on sell and keep tenants on fears as they are also need guarantee home to live,they have Tenancy Agreement with me,which I also don’t want to break,as this days to rent the property even harder ,due to credit checks,I doubt that tenants will be happy to move out,also if they will be moving out,I can’t effort to pay 2 mortgages.
we are now on mortgage charters,anyway,big problem with money we have .And any advice will be appreciated,it’s not my partner fault that he is unwell right now.Also if UC not willing to pay,why they have organised health assessment for him?
Please help me with advice.
May God Bless you all

DE_612183

Has your partner gone through a PIP assessment?
Have you applied for funding as a carer?

born_again

There are many thread such as below on how UC view 2nd homes. 

https://forums.moneysavingexpert.com/discussion/6206137/claiming-universal-credit-if-you-have-a-second-home-you-rent-out

Rubyroobs

It is the equity in the property that DWP will consider. You say that is likely to be more then 16k, therefore you don't qualify for UC. The property may be able to be disregarded for a while if it's being sold .

Grumpy_chap

Lunasun said:

Hello,I have question to ask please.I have a second home which we are renting out.We withdraw the money back in 2018 from this property to buy a second home,to move,as we have 4 kids,needed more space.Since 2018 I have never paid any interest on the house,so basically we still owe to the bank huge amount of money.The tenants live in the property,and I can’t sell this home,as I have to pay early repayment charges as well.Plus the area where is this home located are not great,even if we start selling the property due to the high rates who knows how much it will take to sell.
I don’t work as I look after my disabled mother,my partner due to his health condition stopped working since August 2024.He had his health assessment and they declared that he is not fit to work.(UC).
But UC not paying us anything,as they saying that we have capital,the let to buy house is on my name only,and second home is for both of our names.
we have two mortgages to pay,at least tenants helping me to cover the costs.As one home is 2000£per month,and another one is 800£z
rental income is 1500£only.I started to borrow money now.
May I ask you what benefits we are entitled to?
as who knows how long it will take to sell the property,I am sure If I sell I will have more that 16.000 pounds ,from selling it,but my neighbors are selling their property and it’s takes them almost a year to advertise and no one buys as house is not in a good area at all.
How I can come out from this situation please help me with advice,I am devastated,also my partner maybe entitled for different benefits,such as attendance allowance?He takes morphine right now,and of course not able to work,due to his pain.
I have autistic kids ,2 of them,and it sounds like if we sell the property,we will have that money in future,but who is guaranteed that we will have that money,but the main question is when we will?As we need to buy food pay bills now,any advice will be appreciated.
UC are not helpful at all,they keep saying that we are investigating this matter and they need to verify the capital.What they like to verify,it’s clear that we do have second house,yes and we may have some money if we sell,the property,maybe 20-30 k ,depending on market values.But I can not advertise house on sell and keep tenants on fears as they are also need guarantee home to live,they have Tenancy Agreement with me,which I also don’t want to break,as this days to rent the property even harder ,due to credit checks,I doubt that tenants will be happy to move out,also if they will be moving out,I can’t effort to pay 2 mortgages.
we are now on mortgage charters,anyway,big problem with money we have .And any advice will be appreciated,it’s not my partner fault that he is unwell right now.Also if UC not willing to pay,why they have organised health assessment for him?
Please help me with advice.
May God Bless you all

Have you reviewed all available benefits that you might be eligible for?  Use an online tool such as "entitled to".  Some related to health conditions and caring may not be means tested so not affected by the equity in the second property.

Is your mother receiving all benefits she may be entitled to?  (You did not mention her age, which may have an impact on her entitlement.)

Your UC claim has to be as a couple. and the value (equity) in a second property will be considered as an asset (capital) so, if this is above £16k, your means tested benefits will be zero.
Just to check, that you are not in a transitional period from Tax Credits?  That may mean a disregard is available.

If you get to the point where you can market the second property for sale, then there is a period through which that  capital value can be disregarded.
As you note, selling with a Tenant in situ may not be that simple.  Having a void period with no Tenant may cost in the mean time.  Difficult.

The health assessment will be to determine whether, in the context of benefits, your partner could work or could not work for health reasons.  This will impact the future benefits to which you may be entitled and also may mean that the effort to demonstrate looking for work are reduced or eliminated.

Lunasun

Thank you for all your replies,I have done the calculation,and it says that we are not entitled for UC.
My mother 75 years old and she is only gets pip.
I am her care,and started only few months ago,all this years I looked after her without applying,only when my husband became unwell I started to claim for her.
My husband had an assessment via UC,and they have told him to wait 3 months until the payment will increase,but the fact is they don’t pay anything.
We have 2 mortgages,is it possible if they calculate 2 homes as capital?Even if we sell the home to let,it won’t be enough to cover the mortgage what we owe to the bank.
You are trying to say if I place home for sell,they can pay us?Until it sold?
I am sorry I really don’t understand how does it work.
Why they done health assessment if they are not willing to pay?
or maybe they can divide the claim and pay for my husband and kids only and not paying for me?
yes we have joint claim,but my partner has nothing to o with the first property.his name only on second home where we both live.
Benefit calculator says that we are not entitled to UC but we are entitled to New Style JSA,I mean my partner.
I was wondering maybe it’s some exceptions,like us,yes we do have 2 homes,yes both of them on mortgage,but we need to pay back almost 500.000 pounds back.
as I don’t pay a single penny for the repayment,also it’s been only 5 years,even if we pay back,it’s not possible to find this huge amount.
Technically we have homes but they are belongs to the banks.
I understand Capital can be considered if there is no mortgage at all.
Maybe it’s any loophole where UC can have a look?
as it’s unfair right now,I am sure when my husband will recover he will start working again.
But right now we need help ,Any ideas please I am so devastated.
thank you for kind replies.
P.s.it will be better for UC pay people like us on temporary basis,rather then our homes will be repossessed,and we will go and apply for Housing Benefits as well,it will cost them more.
The way how the system is works something is not right there.
Maybe there is something I don’t know about it?
please help with an advice 

poppy12345

You are living together so you can’t claim UC as single people. Entitlement will be based on your joint circumstances. If the capital in the property you don’t live in is more than £16,000 there’s no entitlement to UC. Yes, you have a mortgage but if the property is sold you would pay what is owed and the difference would be yours, which would be the capital. 

If your partner has worked in tax years 2022/23 and 2023/24 they can claim New style ESA. It would just be their claim and not as a couple. https://www.gov.uk/guidance/new-style-employment-and-support-allowance#eligibility

You said they’ve been through the work capability assessment for UC but were they aware of the property you don’t live in when you first claimed UC? 

Does your partner claim PIP or DLA? If they don’t and you don’t live in Scotland they can look at claiming PIP. If Scotland then it would be ADP. PIP isn’t means tested so capital doesn’t affect it.

You mentioned your mum, as she’s 75 is she also claiming her state pension? 

born_again

Technically we have homes but they are belongs to the banks.
I understand Capital can be considered if there is no mortgage at all.
Maybe it’s any loophole where UC can have a look?

They would only belong to the banks if they repossessed them. till then you own the houses.
No loophole to close.

I take it that the rental is on a interest only buy to let mortgage?


Someone else used this argument awhile ago.

P.s.it will be better for UC pay people like us on temporary basis,rather then our homes will be repossessed, and we will go and apply for Housing Benefits as well,it will cost them more.
The way how the system is works something is not right there.

Lunasun

Thank you for advice,I understand that the house is on my name,of course.And it belongs to us,but if we sell the property we walk away with empty pockets.
Buy To let property is interest only,my mother applied for pension credit but been declined.
its hard to reach them,and I had many stress so I just left as it is.
Of course they know all about second home and one of the home we are living at,I gave them even tenancy Agreement as well.
They still assessed my husband for his health,I do understand it looks like we do have money and if we sell the property we may have some income left,but the question is when we sell,as we need help now,is it like a take credit from them?
let say I will put home for the market and we can borrow from them ,than when it sold we can pay them back?
P.s. I never wrote anything here before maybe people do get same situation as well.
We are family of 7 people,if we will be private renting we need at least 4-5 bedroom house.
also disable person as well ,special equipments for the elderly.
The rent now is 2500£ approximately,plus council tax etc.
I just think how is unwise to pay 4000£ per month,for the family like us,instead of paying 700£ maybe per month on the temporary basis until we resolve our issues.
as far as I can see,that what is going to happen,as I can’t pay mortgage,better banks take the homes and we will apply for the full benefits like others.
I never thought that we will be in this position,sorry 

born_again

While I sympathize with your situation.
In reality until UC come back there is nothing you can do & can not really see a outcome you are looking for.

I would advise to post in debt section (linked below) & complete a statement of affairs to see what advice they can provide in the meantime to help your situation👍 

https://forums.moneysavingexpert.com/categories/debt-free-wannabe

poppy12345

Please have a look at the link I provided above for New style ESA for your partner.