Housing Benefit & money from house sale

[RoseNarene]

Hello!

I'm currently living with my parents (with two girls under 5) as STBXH is living in the former marital home. I'm trying to get him to sell it as neither of us can afford the mortgage but he's not talking to me. But that's a slightly different issue!

I'm looking into my options as I can't stay at my parents' forever. I'm not working and claim benefits like income support and child tax credits. I plan on stopping paying the mortgage (at the moment I contribute less than half of it by transferring it to my STBXH... seems a bit of a waste since he isn't paying me child maintenance at the moment!! Need to sort that out!) so that I can get my own place.

The Council told me I won't get a council house as I have equity in the marital home, but that I will get housing benefit, at least until the house is sold and I get the money from it. So I'd like to find a private let.

My question really is this... once the house is sold, I would like to pay my parents' back for the solicitor's fees (for the divorce) and also pay off a personal loan of about £5000. After this, I expect to have about £20,000 - £25,000 left over. I know that my housing benefit would stop once I receive this.

But it's not sustainable as it will of course run eventually. So my question (finally got to it!!) is: once those savings inevitably dip below £16,000, and none of my other circumstances change (still with kids under 5, still claiming IS etc...) will I just be eligible for HB again? Or will it be held against me that 5 or 6 months previously I decided to pay off a personal loan, my solicitor's fees and outstanding rent to my parents??

Thank you!

No, paying off debts and legal fees shouldn't be considered deprivation of capital. Just retain the documentation showing when the loan and fees were taken out / run up and when you paid them off.

The rent to your parents might be treated slightly differently, as it could appear to be you transferring them money so as to deliberately run your capital down for benefit purposes with a plan for them to give it back to you on the quiet. How much rent are we talking about? A few hundred - couple of thousand accompanied by a statement from your parents that they incurred additional bills during your stay would generally be acceptable; £30,000 not so much! Was there ever an agreement with your parents that rent would be payable? Can you provide evidence of this?

I would also get it in writing from the council that they will definitely pay HB until the house sells and the terms they will do so under: it used to be that you could claim a 26-week exemption to the capital and asset disallow and receive HB if you could demonstrate that you were divorcing and that the house was actively being marketed. However, many councils will try to dodge this. Even if they acknowledge your entitlement, you say your ex is being difficult - you won't be paid HB if the house isn't on the market, or for however long it takes to sell, only the 26 week maximum.

Have been in this position, albeit slightly different circumstances as to how I gained a large sum of money. The answer is yes, once the large sum runs out, you can reclaim HB, but be prepared for a long wait whilst they consider it. You also have to prove what you've spent the money, provide receipts, and bank statements

You can't claim any benefits with that kind of capital

No we never had an agreement about rent, but I always assumed I would pay her back and have told her so since after moving in. She isn't keeping a record of extra bills / food costs, but obviously these would have gone up since me and the kids have been living here. I was thinking around £400 a month. But I haven't discussed it with her.

My ex is saying he won't consider putting the house on the market until the final hearing for the child arrangement order (he got alternate weekends in the first hearing, which is what I wanted him to have). The final hearing is December. So I won't get housing benefit until then? Even if I was forced to move out for reasons of domestic abuse - not violence - but emotional abuse? So if my mum kicked me out (which she won't but let's be theoretical!!) then the council would be happy to see me homeless as they would consider me able to go back to the marital home?

If I have to wait for my ex to be reasonable and for my house to sell, I could easily be living at my mums for a year! That's just crazy. I would go back to my house if I could... but I can't while he is there and tbh I can't afford to keep it anyway. The moment I moved back I would be in debt.

Unfortunately it's the way it is and unless your council are a true exception they'll reject your claim unless you have evidence the house is being actively marketed - though if they've led you to believe differently, get this in writing. If there has been documented domestic abuse and police involvement you could apply for an exclusion order to have your ex removed from the property so you can move back in. Alternatively you can apply for a court order to force the sale, which would give you the power to get the house marketed and sold without him trying to prevent it. Do you have a solicitor? It's in your ex's best interests to get things moving as well, particularly if you plan to stop paying towards the mortgage shortly, and a strongly worded solicitor's letter may reinforce that.

The 26 week exclusion was specifically designed to cover a short-term period and provide a safety net for people who otherwise wouldn't be eligible for HB at all due to capital. You couldn't realistically expect to receive HB for an unlimited period of time whilst you and your ex negotiate about selling the house and argue over accepting an offer, all the while increasing and protecting your equity.

I've dealt with he benefits system for years professionally and I'd largely suspect that your idea to deduct £400 a month rent to parents from your eventual capital would be questioned, sorry. Unless your parents can demonstrate that they incurred extra costs to this level and need to repay them then the suspicion is going to be that this is a deliberate tactic to artificially reduce your capital which your parents will then give back to you.

Would it be questioned even if it didn't take me below the benefits threshold of £16,000? Because it most likely won't. Obviously I'll be expected to use the money from the house sale to replace the housing benefit and income support, which is fine, but since I'm not working that money will eventually run out in six, seven, eight months or so. Would they stop me returning to housing benefit after that?

Even if I could kick him out and move back in it wouldn't solve my problem since I can't afford to live there anyway and want to sell it. Yes the police were called a couple of times but it was more for a potential breach of the peace and to protect myself as he was acting strangely and aggressively. Emotional abuse isn't exactly something you call the police for.

I think a force of sale is my only option but I've heard that it's expensive and I'm not exactly rolling in cash. I just cannot make him see sense or listen to me and tbh if I told him that by not putting the house on the market he was preventing me from finding somewhere to live that would just make him even more eager to fight me. He can't afford the house on his own either so it's just ridiculous. He only wants custody of the kids so he can claim the benefits that I'm receiving because he hates his job and wants to give it up. But even if he were successful, he STILL wouldn't be able to afford that house. His job doesn't pay that much. I'm trying so hard to make him see but he still wants to wait until the final hearing for the child arrangement order. It's hurting both of us and preventing both of us from moving on. It's so unfair that he is able to trap me like this.

I assess HB and in a case where someone's capital has significantly reduced, we'd be looking at large expenditure's and would want an explanation and the supporting paperwork for that. We'd be looking at the overall reduction from when it was at the highest to when it's gone below the £16k. The clearer the paper trail, the easier the decision to award the HB.
Capital from house sale can also be disregarded for 26 weeks ( I think?) If its to be used to buy another house. Is there any chance of this? A low % shared ownership house or something?

Yeah I've looked at shared ownership but there's nothing suitable for my family, plus I can't get that until I get the money from the house that's he's refusing to let me sell.

I just don't want to be a burden to my mother any more and i need to get settled for the kids' sake.

It is tricky to give concrete advice as all councils have different rules regarding deprivation of capital & what they consider to acceptable ways of spending money. I work in a support role for a housing benefit department. From what I have seen, loan repayments to outside organisations are fine, repayments to family are looked into in more detail with evidence requested to prove this money was lent (bank statements, receipts etc) & it is up to the assessor to make a decision. I think paying your parents back for rent could be problematic as there is no proof they charged you, what their extra costs were. It could be said they should have 'evicted' you as you were not on a position to pay. I know that when people try to claim for rent to pay family members, it is a long process with a detailed questionnaire being sent out to complete & again, the assessor must conclude whether it is a 'contrived' tenancy to take advantage of the benefits system. It could seriously delay your claim & put at risk your new tenancy.

If yoh move to private renting then presumably you could pay a lump sum of six months rent up front. That might help in terms of showing what money went on. Nobody could find fault with you putting an essential roof over your heads

16kis the cut off at which you get no help but any capital above 6k and any housing benefit entitlement will start to reduce.