Benefits Affected By House Sale

[NorthWestMan]

Hey Everyone,

Looking for a bit of advice for my mother.

She’s in poor health and doesn’t feel that she has got much time left so she’s looking at cashing in her chips so to speak and buying a Caravan on a holiday park. Its always been her dream to do so.

The issue she has is that if she sells up she wont have enough money to survive without her benefits once she’s cleared her mortgage, bought a static caravan and basically settled up. She gets benefits such as disability, ESA etc. (I don’t know the exact details) however as far as we can work out she will lose them all and eat through all of her savings rather quickly. Part of what she wants to do is to ‘gift’ some money to my brother so that he can buy a home, I’ve included rough calculations below.

House Value: £120,000
Outstanding Mortgage: £20,000
Left £100,000

Caravan Purchase: £36,000
Clear Debts: £20,000
Gift to Brother: £30,000

Remainder £14,000

This £14,000 wont be enough to support herself for long so she wants to keep claiming her benefits but we’re stuck as to how she can sell the house, help my brother buy a property all the while keeping here benefits.

Does anyone have any suggestions or previous experience to help?

Thanks in advance

This plan is bonkers. She has a secure home at the moment with a small mortgage. She could end as a homeless pensioner reliant on shorter lets or living in a bedsit if she gives up that security.

In 7 years the caravan may need replacing- what will she do?
The site may be sold- happened to a friend of mine- the ground rent went up by £1000s a year
How will she pay the ground rent when the lump sum has gone- unlike her home there will be regular site costs.
She may have poor health- but what is her actual life expectancy? You are talking 7 years in the future- could that be 20?
Heating costs in a caravan if electric are very high- £2500 a year.

So she buys a caravan or downsizes and is left with loads of spare cash. Therefore she doesn't need benefits as she can support herself financially. As per previous posters I'm astounded that you're blatantly asking how to fiddle the benefits system. Benefits are there for people that NEED them. It sounds like your mum is in an enviable position where she is (or could be) lucky enough not to need benefits. Shame on you.

Also if she is in poor health living in a freezing caravan is hardly going to help her. It is a totally mad idea. Do everything you can to discourage this. Nice to help children if we can. Certainly not leave ourselves homeless living on a caravan site to do this. Insanity!!

This has surely got to be a wind up.
It sounds as though she only wants to give away the £30k to your brother so she can continue to claim her benefits. I’m really astounded that someone would actually think they could get away with this.

The gift will be seen as deprivation of capital. PIP is not means-tested but some ESA is

Support group contribution ESA is indefinite and not means tested

PIP is not means-tested, but of course, you have to re-apply every three years.

Incorrect. Depends how long the award is for.

I've seen some up to 10 years.

If PIP, ESA etc are not means tested then she should be okay shouldn't she?

PIP isn't means tested.

You need to seek proper legal advice on this. It can easily be classed as intentional deprivation of capital.

Intentional as in intentionally depleting funds to come near or under the limit.
Benefits are ridiculously hard to claim for at the moment, I can see them being rigorous with this sale. Always better to be honest so you don't end up in trouble further down the line.

'Incorrect. Depends how long the award is for.

I've seen some up to 10 years.'

Really? Wow! Not sure she is in receipt of PIP, though, as the OP only mentions ESA. DS is on DLA but that is because he is only 9.

It doesn't matter if the PIP award is for two years, ten or more. They can and have routinely called claimants in for reviews earlier than planned.

You have to have less than £10,000 in savings, anything over and your benefits will be cut. Once it drops below that, you can get reduced benefits as far as I know,

You have to have less than £10,000 in savings, anything over and your benefits will be cut. Once it drops below that, you can get reduced benefits as far as I know
Not quite.

Some benefits, such as PIP and Tax Credits are not affected by capital at all.

Some benefits, such as ESA and LHA / HB use the following rules on capital -

Below £6,000
No effect on benefit

Between £6,000 - £16,000
For every £250 (or part of £250) of capital you have between £6,000 and £16,000 is assumed to produce an income of £1 a week which is added to your other income when calculating entitlement.

Over £16,000
Cannot get benefit at all

Really? Wow! Not sure she is in receipt of PIP, though, as the OP only mentions ESA. DS is on DLA but that is because he is only 9.

Yes. They no longer do indefinite awards though.

It doesn't matter if the PIP award is for two years, ten or more. They can and have routinely called claimants in for reviews earlier than planned

As they could with DLA.

With PIP it is usual for them to get you to review a year before the end of your award.

Although this at first glance is pie in the sky I suspect there are plenty of people who think like this.

Why would anyone want to pass on their money and then carry on claiming benefits because otherwise they couldn't live.

Its rather like my money is my money and the tax payers money is mine too. How can I do keep both?

Like others I think giving money to your DB at this stage just isn't possible (and is unfair to the tax payers supporting your DM) .

Selling her house is perhaps an option and then she needs to live off the equity. I don't think your DB comes into this

Indeed, if this was possible, every one on benefits will assets to sell you pass it on to family.

It's easy to forget that benefit is nothing else but what tax payers are putting into the pot, especially when you've been on it for ages and to also forget that for many of these people will never be in a position to have £100K to dispose as they wish.

If your mum's dream is not live in a caravan, then she should follow her dream. She can afford it, however, she will need to consider the equity she gets from this choice as income just as it would be if she worked rather than seeing it as a windfall she can do what she wants with.

Suggestions

Brother gets second job to save up £30k deposit for a house
and move to an area where houses are cheaper

Mother rents out room in her house, so that she can afford to go on holiday in caravan.
However I dont know if the extra income will affect her benefits
www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2017

Mother checks on Government website to see how much state pension she would be eligible for

Mother does not seem to be in a good enough financial position to give £30k to her son. She is currently not working and has some debts.

I also thought caravans were quite pricy in the form of ground rent?

My advice is your mother should stay put in her house. If she hasn't got long, then when she dies your brother will have some money to put towards a home. If she hasn't already, she should make a will.

Buying a static caravan is a bad idea. BAD idea. Unlikely to be able to stay there all year round. The hiking of site fees and requirement to replace at whim of site owner.
Why doesn't she sell her house, clear her debts and then help your brother out by buying a place with a granny flat or annexe? There would need to be a life time agreement for her to stay there.
This would help brother, save the benefits system some costs. Cut living cuts for both your Mother and brother and be legal. Win all round.

OP - if your mother is thinking of doing this then she needs financial/legal advice about the move. PIP is not means tested but some benefits are.

I volunteer at CAB - she could ask for help with a benefit check or entitled to website is good. At our office we definitely wouldn't advise a family member if they just turned, as it seems that your mother is capable.
Nobody will be able to say what benefits she will be entitled to except now and maybe a few months ahead - no one knows what the government is going to do with the benefit system beyond that.

Would your brother want to move into the house? He could get a mortgage to buy a share, say 50%, maybe at a discount from your mum to give him a small deposit, then your mum uses the money to pay off her previous mortgage and live in a caravan if she wishes? Then later he could buy the other share to allow your mum to keep living in the caravan for years? He still gets a huge leg up by paying into equity instead of rent but she doesn't lose 30k.