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Buying a house on benefits

starbuck

Hi, as a disabled family we claim means tested benefits. We are still on legacy benefits at the moment but will have to change over to UC in two weeks' time.

A relative very kindly left us a large amount of money in their will last year. The probate is still being sorted and the solicitor thinks it will take until after Christmas before it is settled. As we've seen a house that would suit our needs (adaptations etc) the solicitor said he can advance us the money to pay for the house and the conveyancing fees right now.

If this money goes into our bank does this stop all our benefits even though it will be going out again in the near future for payment of the house?

I'm particularly worried about having to change to UC and losing transitional protection if we have to stop and start claiming again.

Has anyone else been in this position or have any advice as my head is like a whirlpool right now trying to decipher it all?

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Comments

Jimm_Alumni

If it is going to be used to purchase a house the capital can be exempt for a number of months @starbuck. Though you will need to provide evidence of this to the DWP. Depending on the case I believe it can be exempt for 6 months.

H2119 Where a person has received an amount within the past 6 months which is to be used to purchase premises that the person intend to occupy as their home, that amount can be disregarded from the calculation of that person’s capital where it
1. is attributable to the proceeds of the sale of premises formerly occupied as their home or
2. has been deposited with a housing association (see H2045) or
3. is a grant made to the person for the sole purpose of purchasing a home

That is if you are keeping the money in your account. If the transfers all happen within a single assessment period I don't believe you would need any exemption? (As the capital would now be a premise that you live in, which is exempt) But if you have the money in your account as an assessment period ends you will need to inform the DWP and evidence to them that it meets the above exemption.

poppy123456

@Jimm_Scope I'm afraid in this situation your advice isn't correct. Capital/savings that are from inheritance, as this is will not be disregarded. A disregard only applies if you're selling the home you're currently living in and buying another. You have misunderstood the regulations you posted.

The 2nd part of your advice is correct. If the money in their account goes in and out in the same assessment period then it will not affect their UC. If they have more than £16,000 on the last day of their assessment period then their UC will end.

You can see the full regulations for this here and as you can see inheritance isn't included.

https://www.legislation.gov.uk/uksi/2013/376/schedule/10

starbuck

It's likely this money will go in this week and we have to claim UC by the 29th August so I think it's likely the money will still be in our account when we claim.

I guess this will mean the claim will be rejected and then when we do reclaim after the money has left the account we will lose our transitional protection.

It's really frying my brain!

poppy123456

Which legacy benefits are you claiming? Do any of them include tax credits?

starbuck

Yes. We're on contribution based esa, carers, pip, income support, housing and council tax benefit and child tax credits.

Our child tax credits end at the end of August so we'll have to claim UC.

poppy123456

Thank you. For you, this is great news! Had I known that to start with then I could have advised you based on that information. This is why it's very important to give all the information when asking for advice.

When you claim UC if you have the money in your bank account you will need to declare that. There will be a deduction of £4.35/month for every £250 or part thereof over £6,000. Capital of more than £16,000 will be disregarded for 12 months because you're migrating from Tax credits but this will only be if you have that capital in your bank when you migrate across.

If that capital drops below £16,000 and then increases back above it, your UC will end, even if it's before those 12 months have ended. At the end of those 12 months your UC will end, if you still have that capital.

Please see link for confirmation and scroll to Transitional Capital Disregard.

https://revenuebenefits.org.uk/universal-credit/guidance/existing-tax-credit-claimants/managed-migration/transitional-protection/

starbuck

Thankyou 😊

poppy123456

You're welcome. Please note, the money must be in your bank when you migrate across to UC for it to be disregarded. If it's put into your bank after you claim UC then it won't be disregarded and your UC will end, if you still have it on the last day of that assessment period.