Selling buy to let to pay debts and claiming Universal credit

RAS

marcia_  and deannagone are pretty clued up on the benefits system.

The important thing is that you get some idea of the assessment periods and plan to receive any funds early in an assessment period. So that you can pay off any additional debts before the end of the period. What matters is how much capital you have at the end of the assessment period, so if you've got extra EA fees etc. you want them paid off quickly.

Grumpy_chap

theartfullodger said:

TanKhan said:

Hi

Any advice will be appreciated.

I bought a 2nd home for £160k and let it out. Mortgage payments and costs are currently too much to keep up. 

House is currently valued by local estate agents at 200k. Want to sell it to clear mortgage and have maybe 5k spare hopefully. (Assuming it sells for 200k)

Will I be able to claim UC after selling and will I need to tell them I sold a house recentl?

I was eligible for UC in the past before I got the buy to let. I'm a full time carer as well as working just 4 hours a week as a driving instructor (caring takes up 40hours of my week)

Thanks in advance

Do the authorities know you own it & have rental income (presumably declared to HMRC??).  With an assets of £200k +  & extra income from it v surprised you get UC - or am I ignorant again????

UC only considers the capital value and not the income derived from the rental.  If both were considered, it would be "double-dipping" on the part of the benefits system.  The capital is deemed to generate a notional income at the same rate for capital within a 2nd property, or capital in cash at the bank.

I am not sure the OP has £200k of assets.  AIUI, it is only the equity of a 2nd property that is capital as the mortgage debt is secured against the property.  Different to having a £20k unsecured loan and £20k in the bank.  Something seems inconsistent, though, with the figures the OP has quoted.
 - Purchased 2nd home for £160k with mortgage.
 - Typically, max 75% LTV so that would mean £120k mortgage and £40k deposit (equity).
 - OP says house value now £200k.  If none of the original mortgage capital value has been paid down (interest only mortgage), that would mean now £120k mortgage plus £80k equity.
 - OP says after selling at £200k, they will clear the mortgage and only be left with £5k...

To a certain extent, the equity in the property now is moot as the OP acknowledged they do not currently receive UC because of the capital in the property.

TanKhan

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

ReadySteadyPop

peterhjohnson said:

TanKhan said:

Rent is already at its highest. No one will pay more. 

That's surprising. In many areas of the country, there is a desperate shortage of rented accommodation. Have you checked with a few letting agents?

https://www.propertywire.com/news/uk/rental-supply-rising-despite-landlord-concerns-over-renters-rights-bill/

Nowhere near as desperate as the media (and some letting agents) like to pretend.

marcia_

TanKhan said:

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

 That is right. 

Bookworm225

TanKhan said:

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

when you sell the property you will end up with cash in the bank. When you then apply for UC your bank balance will need to be below 16k.
where you hide the extra cash is your concern. 

marcia_

Bookworm225 said:

TanKhan said:

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

when you sell the property you will end up with cash in the bank. When you then apply for UC your bank balance will need to be below 16k.
where you hide the extra cash is your concern. 

 😡 They said they will be paying off a mortgage not hiding cash. 

TanKhan

Bookworm225 said:

TanKhan said:

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

when you sell the property you will end up with cash in the bank. When you then apply for UC your bank balance will need to be below 16k.
where you hide the extra cash is your concern. 

I will be hiding the extra cash in Swiss bank accounts like the politicians  😆 

TanKhan

marcia_ said:

Bookworm225 said:

TanKhan said:

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

when you sell the property you will end up with cash in the bank. When you then apply for UC your bank balance will need to be below 16k.
where you hide the extra cash is your concern. 

 😡 They said they will be paying off a mortgage not hiding cash. 

Exactly. I won't have much left but it's better in the long run to be debt free 

Bookworm225

marcia_ said:

Bookworm225 said:

TanKhan said:

So as I understand it, once its sold and all debts and expenses paid I don't need to declare anything about the house I sold. Just as long as I have less than £16k then I'm eligible to claim again with no questions asked ? 

CGT I know about and need to do that online.

My finances then should be more stable and stress over.

Thanks for all the replys 

when you sell the property you will end up with cash in the bank. When you then apply for UC your bank balance will need to be below 16k.
where you hide the extra cash is your concern. 

 😡 They said they will be paying off a mortgage not hiding cash. 

yes, I am perfectly capable of reading without needing to direct emoji at other people , but not seeing an answer to this...

Grumpy_chap said:

 Something seems inconsistent, though, with the figures the OP has quoted.
- Purchased 2nd home for £160k with mortgage.
 - Typically, max 75% LTV so that would mean £120k mortgage and £40k deposit (equity).
 - OP says house value now £200k.  If none of the original mortgage capital value has been paid down (interest only mortgage), that would mean now £120k mortgage plus £80k equity.
 - OP says after selling at £200k, they will clear the mortgage and only be left with £5k...