owning a property too small for my family - UC

bat_crazy123

Hello, I have recently come into some money and have enough to buy a 1 bed flat that im planning on renting out or AirBNB. I have three children, so I will have to continue renting a house as we wont all fit in a 1 bed, and my mortgage capacity is too low to buy anything else.

My question is, will I still be able to claim UC to support my rent of my 3 bed, when I own a property deemed too small to live in?

huckster

If you have come into money more than £16000, you will need to report change of circumstances. On homepage of claim click on report a change and then update money savings and investments.

UC won't disregard the money, based on what you have mentioned and your claim will close from date you received the money above £16000.

If you tried to reclaim UC later and have an investment property with equity exceeding £16000 allowing for 10% selling costs if you had to sell, then your UC claim would be closed as not entitled.

NedS

As stated above, if you have more than £16,000 in assets (cash, savings, property) then you are not entitled to claim UC. You will need to declare the money and your claim will be closed. You will be expected to live on this money until you have less than £16,000 at which point you can reclaim UC.

If you are able to purchase a flat to rent out and generate sufficient income to support you, great. Otherwise you should use the money to support yourself and your family until such time that you are able to claim UC again.

The only exception to this is if you are able to purchase a property to live in, but unfortunately it sounds like you do not currently have sufficient income to secure a large enough mortgage to do this. 

Muttleythefrog

As above...a potentially trick situation to manage for best longer term. Obviously inheritance counts as capital and needs to be declared (>£16k no entitlement to UC and as above I assume if you can buy a flat then we are talking more than that). I wonder if a deep think about this is needed. You lack the resources to apparently use the inheritance to benefit your own housing situation but you probably have enough to lose UC entitlement. Have you got any notable debts you could pay off?

Becoming a landlord is effectively becoming a small business and there can be lots to think about as is advised elsewhere on the site.... costs and profits definitely need focus if this is a longer term income solution.

What you want to ideally avoid is a situation where the inheritance is spent on a property which you rent out but is insufficient income alongside losing benefit entitlement (property owned you do not live in usually would count as capital) meaning you end up having to sell the property to survive... and then ultimately end up back to square one. But that is a possibility meaning the inheritance would diminish one way or another unless the income streams sufficient to survive.

Spoonie_Turtle

Could you use it for a shared ownership house where you can live with your family?  I don't know if it would be the best option, but just if you are certain you want to use it to buy property then that's the only way you'd still be able to claim UC once you've used the money to buy.  And I believe you would be entitled to help with the rent portion as well.

NedS

Spoonie_Turtle said:

Could you use it for a shared ownership house where you can live with your family?  I don't know if it would be the best option, but just if you are certain you want to use it to buy property then that's the only way you'd still be able to claim UC once you've used the money to buy.  And I believe you would be entitled to help with the rent portion as well.

This is a good suggestion and worth talking with your local housing association to see what they are able to offer by way of shared ownership.

born_again

Muttleythefrog said:

As above...a potentially trick situation to manage for best longer term. Obviously inheritance counts as capital and needs to be declared (>£16k no entitlement to UC and as above I assume if you can buy a flat then we are talking more than that). I wonder if a deep think about this is needed. You lack the resources to apparently use the inheritance to benefit your own housing situation but you probably have enough to lose UC entitlement. Have you got any notable debts you could pay off?

Becoming a landlord is effectively becoming a small business and there can be lots to think about as is advised elsewhere on the site.... costs and profits definitely need focus if this is a longer term income solution.

What you want to ideally avoid is a situation where the inheritance is spent on a property which you rent out but is insufficient income alongside losing benefit entitlement (property owned you do not live in usually would count as capital) meaning you end up having to sell the property to survive... and then ultimately end up back to square one. But that is a possibility meaning the inheritance would diminish one way or another unless the income streams sufficient to survive.

Especially with the impending change in rent regulations & no fault evictions.  Renters' (Reform) Bill