Sad for my friends £125k lottery win.

[Sogfree]

£125k win on the postcode lottery.

Single mum to 3 children (all primary age). Works as a TA, so receiving benefits to top up her income.

She would like to use her winnings for a deposit on a house. But due to the benefits rules not being allowed to pay a mortgage, she can't buy a property.

So she's going to spaff the entire lot as quick as she can, and the government will continue to pay rent to a multi property owner and make them richer.

The only asset she'll get to keep is a newer car - not anything fancy as she knows she won't be able to afford the insurance/fuel once the winnings run out.

Her one chance of breaking free of a life on benefits and she's got to throw it away. It feels wrong.

Well the OP's friend is close based on nothing more than what we know about. If she gets housing benefit she highly likely to be at the £50k point.

Is there a cap on housing benefit? If not you could be equivalent of a higher rate tax payer on housing benefit alone.

Housing benefit will only be paid at the rate of the cheapest 30% of properties (of the appropriate number of bedrooms) in the area. So a sort of cap, although it changes by area.

Yep, and it often does not even cover the rent.

So I was right. If you want to live in central London you're getting well into higher rate tax payer money.

My mistake. It's being lifted on the 6th of April. I understand your point but the entire issue is that the OP is saying that her friend can't pay a mortgage if she buys a property. Of course it's the fact that she's getting her rent element paid or at least part of it that's one of the issues in this scenario - because she's going to have to go from getting her rent paid or at least a proportion of it to paying a mortgage on her own

There are too many factors that we don't know about. We don't know her entire income. We don't know where in the country she lives and what houses cost in the area she lives

She could also look into claiming carers allowance if she's eligible if she doesn't already

Even if she keeps the 125k and decides not to spend it on a property she's probably going to have to move house and try and find somewhere cheaper as the OP said she's in a private let that costs a fortune

The real issue is that there aren't enough affordable social or housing association houses and people are stuck paying what a landlord wants to charge for their property.

Her landlord could also decide to sell up at any point and there is a process that needs to happen before she would need to move - that's also something she needs to consider. How secure her current situation is

The friend could pay a small mortgage. Universal Credit allows for this if you're working - you can earn more before they start taking money off your UC. The last time I checked it was about £200 a month. So she could pay that.

Where I live this would be possible - but we don't know the house prices where she is.

”she gets a wage. A UC top up. Money for her kids and her rent paid or most of it“

UC is to cover everything. Food, utilities, travel, rent, all from one payment. Housing Benefit no longer exists, and it never covered all your rent anyway. Also, OP has said her friend gets £78 a month (or a week? Which is what, £320 a month?) as child maintenance, which is still a pittance. Either way, she’s not loaded.

Im aware of that. I'm on UC. It's not the case that Uc housing element doesn't cover all rent for everyone. It will for some people and other people will get the LHA rate for the area

She's working as well - 32 hours a week for 38 weeks of the year.

There are lots of people who aren't loaded who manage to buy property whether that's with a mortgage or shared ownership

She's currently got 125k in the bank - that's a better starting point than a lot of people have when they are looking to buy a house

I was referring to the child element from UC that she is entitled to for her kids as well (two). She'll be entitled for the third child as well after April 6

Obviously part of the reason she is reluctant to come off UC is that she gets money for her kids as well (she's entitled to that).

And this is the issue with low wages and the benefits system in the UK.
Very very difficult for people who are low earners to get themselves of the benefits system.

TBH I can't blame people who rely on the system. The system is almost set up to keep people down.

Uc do pay the interest sometimes but it is a loan. You have to pay back when sell property /move

I'm laughing at everyone saying "buy a house outright". Where are you all living where you can buy a 3 bedroomed house including all moving costs for £120k?

I'm in the northwest, which everyone always states is so cheap. But housing costs round here have gone through the roof in the past 10 years. 120k would just get you a 1 bedroomed, possibly a 2 bedroom flat round here, and that's not ideal if you have 3 kids. Very basic flats, too.

As a single parent you wouldn't want to move the kids to a different area away from their school and friends and support for yourself, especially if any family are nearby.

So while I understand the scoffing and outrage, I CAN see why that amount of inheritance is a double-edged sort. 10 years ago it may have bought you something ok, but not anymore. Even with a mortgage, a 3 bed house is well over 200k round here now. Being a home owner is not cheap, most of the affordable properties need a lot of renovation, and that costs.

And this is the whole issue. As housing costs are so overinflated, so is the damned benefits bill too.

I don't know what the answer is, but basic property just isn't worth what it's selling for. We have a lot of southerners who are second home owners moving into the area pushing costs up too as they can afford to pay more than local first time buyers can. And so it goes on. Housing costs are spiralling up and up.

As a single parent you wouldn't want to move the kids to a different area away from their school and friends and support for yourself, especially if any family are nearby.

That's what people who don't get benfits do - they have to move to follow the work and move to places where they can afford to rent/buy.

As housing costs are so overinflated, so is the damned benefits bill too.

You've got your cause and effect the wrong way round. The state gives people money to rent houses so that's essentially the state bidding against itself for housing. A quick look at a graph shows inflation was pretty manageable until we leaned into welfare. At that point it rocketed. Totally predictable.

OP's friend can't move as she has caring responsibilities (her DM).

People find ways if they have to, but not if they don't have to.

....but I wasn't personalising that post to the OPs friend, my point was general.

I don't think that it IS the norm for most people, actually, to have to move to a cheaper area of the country once you are at the stage of life where you've got 3 kids settled in school.

As house prices go up and up and up, what are we all going to do, keep moving to cheaper areas, and putting the prices up there? It is absolutely ludicrous that that people who already are settled in a job, with kids in school, with family support nearby, have to move to a cheaper area BECAUSE they come into a bit of money. We are going wrong somewhere as a society if this is the case.

She doesn't need to live in a house. She could live in a flat.

The bottom line is. She's either going to have to invest in property or come off benefits. She can put a very good deposit down on a flat or house if she can't buy one outright as I said previously

My brother bought a flat two years ago for 100k. He's not rich - far from it. His flat is only two bedroomed but it's not grim. Far from it

Again it's very hard to talk about what she can and can't do when no one knows the area she lives in
If she doesn't invest in property she's going to have to come off benefits. Unfortunately those are the rules

Again that's down to dwp rules. You can't have 125k in the bank and continue to claim benefits unless you buy a house. So she's going to have to make a decision - and probably come off benefits if she wants to stay in the area she currently lives in

My flat was sold for 26k five years ago. Ex council. I have no idea why it was worth so little as the private houses in the same area less than half a mile away go for over 100k. But that was the market value. I was on Uc at the time when it had to be sold. The money wouldn't have bought me another flat in my area - so as soon as that money hit my bank I had to come off benefits.

Yes the rules can seem unfair - very unfair - when you are in a situation that you hadn't planned for.

When my flat was sold I lost my benefits. I lost my council tax reduction - and I had to live off the money I got for my flat until I could claim UC again or find a job which didn't happen at that point.

There isn't any way around this - she has to buy property or give up her benefits - because you can't be in a situation where you have 125k in the bank and claim UC - or everyone would be doing it

And yes. I completely understand that she's in the benefit trap and it's really unfortunate - where she stands to lose a lot of money if she gives her benefits up - but there's no way around this

On that we agree. If we're giving people money in such massive quantities that a £125k doesn't feel like a good thing there's a massive problem.

....and yes, we would all move to cheaper areas and those areas would increase in value. That's how the market works. But we're fiddling with the market by using public money to pay people to overheat the Southern Housing market while there are areas in the North and especially in Scotland that are shrinking or barely growing at all.

We have people living near the city in London subsidised by the tax payer when people who work in the city of London can't afford to live in London and have to commute in. It's mental.

I'd like to say we can't go on but I think we're past the tipping point the brain drain has been in flood for years and unproductive people are getting paid to breed. The balance can't tip back.

You have some valid points regarding housing, but there is no need for stuff like "wasters are getting paid to breed".
No need at all.

Edited to change it.

Not sure it's that. It's the fact that the OP is in a private let by the sounds of it. Could be paying over a grand a month and then some (to pay someone else's mortgage) - so if she comes off benefits - she'll have to pay that rent

I'm in a different situation. My last flat was council and when it had to be sold the council had to rehouse me as they basically made me homeless.

My rent is 355 pounds a month for a one bedroom flat in the West of Scotland. It goes up every year but I'm not in the position where I'm private renting and people can effectively charge me what they want to

In Glasgow - around 20 miles from me - people are paying 600 quid a month plus for a room - because there's a shortage of housing and landlords know people will pay it - students in particular. I saw a room advertised in Newcastle yesterday for 280 quid a month - some people might think that's cheap but it was basically a cupboard.

It's not just on people who claim UC. It's on landlords who charge over inflated prices - and some of them will have their mortgage paid off already - because they know people are desperate.

I also do know there are costs associated with being a landlord - but the OP could be paying 1.5k a month upwards for the accommodation she's currently living in - you come off benefits and you have to pay it yourself

I didn't personalise anything to the OP, or to individual tenants.

But now you mention it, why did your flat have to be sold? That seems deeply unfair. (I resisted prying at first but now I can't resist.)

As an aside, I could not be more jealous of where you live. It's my idea of paradise.

Because apparently no one wanted to live in the area (high deprivation). I'm not sure that's true tbh. I had been there 25 years. They basically flattened the housing scheme I lived in and at first we were told we would have an option of getting one of the new houses they built in its place - then they changed their mind so we all got decanted and had to move out of the area. Lots of people voted for demolition because they believed they would get one of the new houses. We were asked to go and choose our new house on the new development and then the council changed their mind and said no

I wasn't having a dig at you - it was just an observation that even when you live in an area that's relatively cheap - people can still pay over the odds for private accommodation - because there's not enough accommodation and too many people who need it

Wasn't just my area that the council flattened. Lots of neighbouring towns. At first they were going to bring the towers down only then they changed their mind and the four in a blocks had to come down too