Cousin on UC, finally getting divorce money, wants to use it for house but in 2 years.

Cmkrd · 2 April at 6:27AM

Hi, my cousin is finally getting her divorce payout of about £20k. She’s on universal credit and we know anything over £6000-£16000 changes her entitlement and over £16k stops it altogether. She really wants to use it to help her buy a house, create some long term equity for her but it’s not enough on its own. I’d like to help and buy a house with her but I can’t access a big enough mortgage on top of my own until my youngest is at school as the nursery payments are taken into account and are capping me to a house purchase of around £90,000 and we really want £160,000.

I know you can extend your allowance with UC for 6M when buying a house but not two years. What can we legitimately do to protect her money for two years without also having her UC stop? It’s seems so harsh that money that could help her ultimately come off UC (mortgage calculations are much cheaper monthly than rent for example) and give her greater security in older age (aged 47 now) might instead have to be used, UC stopped and then restarted
once spent on living. She does have some debts with family members (myself included) although I was going to waive it. Can she pay 3 of us £5k each for example and in realty we hold it for her, what paper trail would be needed or risk would she be running - as I figure any lump sum she receives will be registered by the tax man and transfers would need to be justified.

Any thoughts or suggestions welcomed.

marcia_ · 2 April at 6:37AM

Cmkrd said:

Hi, my cousin is finally getting her divorce payout of about £20k. She’s on universal credit and we know anything over £6000-£16000 changes her entitlement and over £16k stops it altogether. She really wants to use it to help her buy a house, create some long term equity for her but it’s not enough on its own. I’d like to help and buy a house with her but I can’t access a big enough mortgage on top of my own until my youngest is at school as the nursery payments are taken into account and are capping me to a house purchase of around £90,000 and we really want £160,000.

I know you can extend your allowance with UC for 6M when buying a house but not two years. What can we legitimately do to protect her money for two years without also having her UC stop? It’s seems so harsh that money that could help her ultimately come off UC (mortgage calculations are much cheaper monthly than rent for example) and give her greater security in older age (aged 47 now) might instead have to be used, UC stopped and then restarted
once spent on living. She does have some debts with family members (myself included) although I was going to waive it. Can she pay 3 of us £5k each for example and in realty we hold it for her, what paper trail would be needed or risk would she be running - as I figure any lump sum she receives will be registered by the tax man and transfers would need to be justified.

Any thoughts or suggestions welcomed.

Ignoring saving for UC is only if you have sold a house and are buying another . Is that the case?

Giving money away or hiding it is deprivation of capital and fraudulent.

Paying off any debts, which can be evidenced with a credit agreement etc is allowed. Family debts not so unless there is an agreement in place to repay,

huckster · 2 April at 6:42AM

There is no period of disregard for this money and she cannot hide having it by passing it to others to hold it. She will lose entitlement to UC until her savings naturally reduce below £16k.

Has shared ownership been looked into as a way of buying a property ? Many Housing Associations are now building developments which will be available under shared ownership. This would enable build up of equity in property.

Cmkrd · 2 April at 10:30AM

This is my worry and what I thought was the case. We have looked at shared ownership but the scheme in Northern Ireland means she has to secure a small portion of it as a mortgage in her name and currently she earns below the minimum for a bank to consider her (£16k annually I think) so we are working on how to get her earnings up asap to try and reach that threshold but they’ll need to see evidence of it for 3 months payslips. It feels like her only option will be to live off it and then go back onto benefits 😕

Cmkrd · 2 April at 11:16AM

Only other thought to try and gain her some benefit from the lump sum would be to put it into a pension? I presume that would be allowed and then I can explore taking out a second mortgage and fund a house for her to live in…

andrewmp · 2 April at 11:41AM

Cmkrd said:

Only other thought to try and gain her some benefit from the lump sum would be to put it into a pension? I presume that would be allowed and then I can explore taking out a second mortgage and fund a house for her to live in…

From everything you've said, that may be considered deprivation of capital.

HillStreetBlues · 2 April at 11:50AM

Cmkrd said:

Only other thought to try and gain her some benefit from the lump sum would be to put it into a pension? I presume that would be allowed and then I can explore taking out a second mortgage and fund a house for her to live in…

Clearly by that post the intention is to reduce capital so can maintain UC. There is only two times DoC can never apply, that is pay off or reduce a debt and to pay for goods and services if the purchase was reasonable in the claimant's circumstances. All other methods should be treated as DoC as that is the purpose.