Second home and Universal Credit

peteuk

Lunasun said:

Hello,I had a discussion in regards second house,and applying for UC,as currently out of work due to the health issues.Second home was placed on market,as the rates is higher than rent,and it’s not a lot of value.But if we sell it,it will be more than 16k profit.
But it’s a big question IF we sell it,and when is also important.As the help we need right now.
I been given advice from this forum,that if house is for sale (second home),than UC can disregard this as a capital.
Maybe someone knows more information about it.Can you please share the link if you have one,where it says.As I don’t really want to apply without making sure.
Also my second question is,maybe it’s possible to ask UC to help and when house will be sold we can pay them back?
Kind Regards 

As for your second question - no.  If the decision maker decides you have capital above £16K then you will not be able to claim UC.   If they disregarded this as it’s for sale, you will be able to claim UC, for the 6 months.  At that point it would go back to a DM for review.   If you can prove that there is a sale eg awaiting completion date then the disregard may well be extended to that date. 

Once sold any monies left over will be classed as capital. 

Lunasun

Thank you for advice,yes I have tenants,but estate agent told me that it’s even better as people can buy a home as a business,but at the same time tenants agreement ends in few months,and I have told them about situations,they are fully aware.And it’s a leasehold property and completion will take around 2-3 months maybe new owner but with tenants,or tenants has plenty time to move.
I will see what we can do about it.
thank you

Lunasun

May I a mask please,if we sell home yes it be more than 16 k,but I will place that money towards our current mortgage,as it’s huge amount we have left to pay for our main residence.
how this money can be classified as capital if they will disappear as soon as they reach my bank account,they will be transferred to my main mortgage,maybe even if I speak with solicitor,I don’t need them on my account,I will transfer them to the current mortgage,as our rate is so high,we pay almost 2000 per month.The rental property also doesn’t bring any money,as the rate is also become high.But the price of the house has risen,and of course within 10 years we will have profit,but I was gonna use that not to enjoy,I was gonna use that to pay off some money towards our main home.
How come UC classified that as a capital?

born_again

If you pay it straight towards your mortgage then it will not effect a UC claim, so long as in the same AP.
Do check that you can make that amount of payment towards your mortgage without incurring a penalty though.

peteuk

Any monies held at the end of your assessment period is classed as capital (excluding any income/benifts recieved within the assessment period)  If you recieve it and pay your mortgage within the assessment period then it wont be classed as capital.  If however you keep it a week and during that week your assessment period ends it will be classed as Capital. 

The other aspect of this, is check your current mortgage, becasue overpayment may cause an aditional cost. So if your paying a large amount it might be that that doesnt all go towards the mortgage.  Or in our case we can only pay a % of a set amount per year. 

sheramber

Remember you  may have Capital Gains Tax to pay on the profit you make when selling the rental property.

You must pay any tax due withing 60 days of the completion date.

RAS

There are a lot of discrepancies in your threads.

Would you have to pay an Early Redemption Penalty? Or is your "mortgage rates about to expire"? In which case allow it to transfer to SVR.

Are you going to walk away from the buy to let with empty pockets? Or is there over £20-30k in equity?

You have £700 net income per month from the rental, and hopefully have been keeping up to date on the HMRC situation?

I'd suggest that you get some serious advice both on your mortgage situation and on giving notice to your tenants. Make absolutely sure you have ALL the required legal documentation in place before issuing the S21 notice but do explain to the tenants prior that you have to sell or be repossessed. 

The tenants will be advised to stick it out until the bailiffs arrive, if they are hoping for council housing. Offer to be flexible if they want an early termination of the tenancy, as that's to your advantage.

Then talk to both your mortgage providers.

Both would probably prefer you to sell on the open market but sorting out the rental is probably the primary issue.

And tell the DWP that you are trying to sell. It will be a lot easy when you can sell with vacant possession.

You might get UC to keep everyone afloat, but unless you can go to work and earn enough to cover the mortgage on your current house, that situation doesn't look good either.

And don't forget that if you make a decent profit on the rental, there will be a CGT liability to pay within 60 days. 

Do go over to the DFW section, and the Housing section for advice on the tenancy.

MSE_ForumTeam5

We've merged the threads

Lunasun

Hello,we can pay 10% each year additional charges for our mortgage.Our tenants are moving out next month,as their contract will expire.They found somewhere else.Of course I also pay tax as I am classified as self employed,from the rent.I don’t know how it’s will work,but all I know that if we sell rented property we will place that money towards our home without a penalty.
thank you for all advice.

I will try to apply for UC and keep u updated,I’d they will refuse I will share my experience with you,so maybe it will help someone who has similar situation.
if they will approve I will also will share their decision.

Harry50

Hello, I am exactly in the same boat, I have two houses and one is on rent just about covering costs, houses do need upgrading but I don't have the funds. I can only work part time as I have two disabled children, also my partner mainly looks after the children but still requires both of us to care for them. I do not get UC because of the second home and am struggling to meet ends. I am thinking of selling the second home as this is the only way out, if I could work full time I could survive through but looking after two disabled children limits why work and my partners. I cant survive on part time work and I cannot work full time. I get no benefits only carers Allowance and DLA, and these just scratch the surface. The system is messed up for people like us, there needs to be a exception for such circumstances.