UC and buy to let

rizo

hello i have a but to let with a mortgage still 
i originally lived in the property and moved out to buy with my partner hence renting it out 
due to family illness we now find ourselves we need to make a claim for UC 
i understand the rules on the capital 
but my main question is the tenants are not family members they do not receive housing benefit and they have been tenants for over 10 years 
the gentlemen is registered with impaired sight and other disabilities and his partner still works both over 60 
the rules say if these where family members the capital in the property would be disregarded and the rent received would be capital 
i caanot simply put my buy to let on the market and make these people homeless so i can release the money 
yes i could sell it to a landlord who no doubt would increase there rent i charge them a fair market rental price but could get more bit they look after the house perfect and never had any issues so would sooner get less keep someone on there home who looks after it 
so if they where a close family member i could claim uc but because they are not i cannot claim the capital is over £16.000 in the property but the rental is £7.200 i know money would be deducted as capital is over £6.000 

Grumpy_chap

rizo said:

hello i have a but to let with a mortgage still 
i originally lived in the property and moved out to buy with my partner hence renting it out 
due to family illness we now find ourselves we need to make a claim for UC 
i understand the rules on the capital 
but my main question is the tenants are not family members they do not receive housing benefit and they have been tenants for over 10 years 
the gentlemen is registered with impaired sight and other disabilities and his partner still works both over 60 
the rules say if these where family members the capital in the property would be disregarded and the rent received would be capital 
i caanot simply put my buy to let on the market and make these people homeless so i can release the money 
yes i could sell it to a landlord who no doubt would increase there rent i charge them a fair market rental price but could get more bit they look after the house perfect and never had any issues so would sooner get less keep someone on there home who looks after it 
so if they where a close family member i could claim uc but because they are not i cannot claim the capital is over £16.000 in the property but the rental is £7.200 i know money would be deducted as capital is over £6.000 

The UC will consider your income from both yourself and your partner as joint claim.
Capital that you both have will also be considered.  If your joint capital is above £16k, there will be no entitlement to UC.

The BTL will be assessed as capital which is the current value of the property less any mortgage.  Debt is not usually set off for UC but is in the case of a second property with the secured loan (mortgage). 
There is also an allowance that can be deducted from the property value for cost of selling.
(Value in a property can sometimes be disregarded but there is no indication that the disregards will apply in this case.)
The income from the BTL is not considered in the UC assessment as that would be double counting.  Any income (after allowable expenses) from the BTL becomes capital.
(The way the capital is assessed is a deemed income and, once capital is at £16k that deemed income is sufficient to negate any UC entitlement).

The rules are the rules - the tenants are not family members so you cannot claim that they are.

You mention that the reason for the change of circumstances is related to illness within the family.  Have you investigated whether any Carer's Allowance / Attendance Allowance and such like is available?
Or PIP / DLA / ESA etc?  I am not up to speed on the criteria for these support lines so cannot confirm whether they all remain open for new claimants.  Some are not necessarily means tested.  
There are various online resources that can provide guidance and / or contributors to this forum will likely be able to offer some guidance.

While this change of circumstances is difficult and a challenging time, you are in a way in a better position than many in having the asset of the BTL to provide some independent support.

How close is the relative with the family illness?
How long term do you think the new caring requirements will be?
Do the caring requirements mean that neither you or your partner are able to continue in any paid employment?

rizo

I just wanted to know why just because the tenants are not relatives 
they are both over 60 
and one is partially sighted 
they don’t claim housing benefits 
will the capital not be disregarded as if the where relative it would be and I could claim UC 
And I would not say they where my relatives either 

poppy12345

rizo said:

I just wanted to know why just because the tenants are not relatives 
they are both over 60 
and one is partially sighted 
they don’t claim housing benefits 
will the capital not be disregarded as if the where relative it would be and I could claim UC 
And I would not say they where my relatives either 

No it will not. Simply because they have to draw the line somewhere. If they didn’t then everyone renting out a property would be able to claim means tested benefits. 

Please also note that this forum isn’t about benefits policy.

Grumpy_chap

rizo said:

I just wanted to know why just because the tenants are not relatives 
they are both over 60 
and one is partially sighted 
they don’t claim housing benefits 
will the capital not be disregarded as if the where relative it would be and I could claim UC 
And I would not say they where my relatives either 

AIUI, the exception for letting out a house to the defined list of relatives is not about the health and capability of the tenants but about the obligation of the individual to provide for the close relatives.  It is quite a narrow list of relatives that can be considered, and really comes down to the relatives being in some way dependant on the individual.

In the case of unrelated tenants, if they are more mature or suffer from impairments, their entitlement to any support would be their own concern and assessed by the UC system as appropriate.  If the T's do not claim any benefits, not that it is any of your concern, the T's are likely not eligible for any benefits.

It is fairly simple, you will not be able to have the capital disregarded unless you take some action such as putting the property up for sale (genuinely up for sale either with sitting T's or commencing eviction process).