2nd Home but Nephew in it renovating

MuchosSkintos

Hi Guys Newbie here, so stressed
Family Business started in 1967 is now going into liquidation, making a claim for universal credit, we have a 2nd property that was left to us in a will, it was unliveable, so my Nephew is living in it as he has no where to live & instead of paying any rent he is doing it up, no kitchen yet, but at least he has a bedroom & bathroom, when it is finished the idea is to sell it & give him a portion of money so he can move on, but I don't know how long, should this effect my universal credit as both my husband & I are not working, my husband has lots of issues, currently being investigated for dementia & I have been on citalopram for 20 years & now in deep depression we are only 62 & 63 but we also have 5k on credit cards, no mortgage thankfully, was thinking of putting the house in my daughter's name or in trust, just don't know what to do, my husband also had a bypass in 2017 & a mini stroke from the COVID jab Xmas 2023, sorry to go on but HELPPPPP, also I never made a claim on our repayment mortgage which fell short of about 15k any chance I can try & reclaim it now.
Sorry for the length of the message 😢thank you xxx

KxMx

There is potential for the property to be disregarded temporarily (see last paragraph) 

https://www.uceplus.co.uk/disregarded-capital


Otherwise, you would not be entitled to receive Universal Credit payments. 

Any attempt to give nephew some of  the proceeds or put it into daughters name is likely to be seen as deprevation of capital. 

You are allowed to pay off debts, this won't be seen as DoC. 

I would recommend getting specialist advice from a local welfare rights organisation. 

https://advicelocal.uk/welfare-benefits

Spoonie_Turtle

In its current condition, how much would the property be worth?  If there's a small enough amount of equity in it that your total capital/savings are under £16,000 then you'd still be eligible to claim (for now, until it increases in value beyond that threshold from further work your nephew does on it). 

The reason 'having a second property' is seem as something that automatically excludes people from claiming is usually those second properties are livable and worth much more than £16k.

sheramber

KxMx said:

There is potential for the property to be disregarded temporarily (see last paragraph) 

https://www.uceplus.co.uk/disregarded-capital


Otherwise, you would not be entitled to receive Universal Credit payments. 

Any attempt to give nephew some of  the proceeds or put it into daughters name is likely to be seen as deprevation of capital. 

You are allowed to pay off debts, this won't be seen as DoC. 

I would recommend getting specialist advice from a local welfare rights organisation. 

https://advicelocal.uk/welfare-benefits

The OP is not currently trying to sell the property.

KxMx

If it's "unliveable" getting someone to renovate so it's fit for sale, there is a potential argument to be made there. 

Spoonie_Turtle

KxMx said:

If it's "unliveable" getting someone to renovate so it's fit for sale, there is a potential argument to be made there. 

Interesting.  The issue would be whether the DM decides they are "Premises that a person is taking reasonable steps to dispose of" (per the legislation.  Note it goes to on say that such steps have commenced within the previous 6 months, but the ADM says a DM can disregard for longer if reasonable).   

The decision of course would come down to the facts of the case, much more than the information given here.

HillStreetBlues

KxMx said:

If it's "unliveable" getting someone to renovate so it's fit for sale, there is a potential argument to be made there. 

It's still sellable so would have to catch a DM on a very good day.

KxMx

As I said, potential. 

HillStreetBlues

And as i said catch a DM on good day!

Grumpy_chap

Spoonie_Turtle said:

In its current condition, how much would the property be worth?  If there's a small enough amount of equity in it that your total capital/savings are under £16,000 then you'd still be eligible to claim (for now, until it increases in value beyond that threshold from further work your nephew does on it). 

The reason 'having a second property' is seem as something that automatically excludes people from claiming is usually those second properties are livable and worth much more than £16k.

Just to clarify on the second property and the value that is used for eligibility for UC.  Is it purely the equity that is taken into account (value less mortgage) or is it the whole value of the property and the mortgage ignored?

If it is only the equity that is considered capital (which would make a lot of sense), it would be treating the capital within a property differently from capital in cash.  AIUI, if an individual had, say, £20k in the bank and debts of £15k, that individual would be assessed as having greater than £16k capital.  Obviously, that individual could repay the debts and then have the £5k capital, but while the individual has both, the eligibility for means-tested benefits is impacted.

In the OP's case, the quicker they can get the property marketed for sale, the better, as that will allow the disregard to apply.

• How long will it take the Nephew to complete the house renovation so that it can be sold?
• Is the cost of those renovations likely to be recouped through increased sale value compared to simply selling now?
• Can the property be sold in the current state?
• Where will the Nephew live once the property is sold?

Obviously, once the property is sold, the OP will have the capital in a readily accessible form.  If this is greater than £16k, there will be no entitlement to means-tested benefits.  The OP can repay any debt and that will not be deprivation of capital.  If the OP gifts an amount to the Nephew, a DM may well consider that is deprivation of capital.

With the various medical conditions noted, has the OP investigated whether her or her husband are eligible for any benefits which might not be means-tested?

HillStreetBlues

Grumpy_chap said:

If it is only the equity that is considered capital (which would make a lot of sense), it would be treating the capital within a property differently from capital in cash.  AIUI, if an individual had, say, £20k in the bank and debts of £15k, that individual would be assessed as having greater than £16k capital.  Obviously, that individual could repay the debts and then have the £5k capital, but while the individual has both, the eligibility for means-tested benefits is impacted.

It's equity, the reason is a mortgage is a secured loan so capital will always be what's left over from paying back that loan.