Question re universal credit please

[Menora]

Hi can anyone answer this question?

Someone sold a house due to divorce and used their portion of equity to buy a much smaller shared ownership home (under 50% ownership and have a mortgage too). They live with 2 small kids and work 15 hours a week, looking for more work and hours (COVID reasons they had their hours cut)

When they applied for UC, it was declined because of having too many savings. They don’t have savings so think this was the equity in the property

I’m just checking this is correct, this is classed as savings and technically something they should live on, even though they secured a home with it?

Wasn’t looking for help with housing but tax credits perhaps to help whilst looking for extra hours. They couldn’t afford to rent on their salary without renting away all the equity.

Thanks I am just checking this is correct, does this mean homeowners cannot access UC or CTC type support at all

No expert but that doesn't make sense. As far as I can tell, equity is not looked at by UC. Homeowners can access UC, they just don't get the rent element. Your friend would be eligible for rent help as it's a shared ownership scheme.

Had she bought the property at the time of applying for UC? I suggest she re-applies.

www.understandinguniversalcredit.gov.uk/new-to-universal-credit/housing/

Usually with universal credits if you sell your home you can appeal the savings cap if you can show your buying a house etc it's up to 16k savings to no longer be entitled to UC but if she proves the fund are solely for a house purchase then she can still claim.
You can still have UC and a mortgage they just won't pay for you mortgage repayments

Yes I think it should have been disregarded as capital because it's going straight into buying another property. the person should also be able to claim rent element on the rental share of the house.
As long as they do not have savings over 16k they should be able to claim.
Did they explain at the time that the capital was going into the deposit for another house ? They should ask for it to be looked at by a decision makerif they don't agree with the decision.

@Menora

Hi can anyone answer this question?

Someone sold a house due to divorce and used their portion of equity to buy a much smaller shared ownership home (under 50% ownership and have a mortgage too). They live with 2 small kids and work 15 hours a week, looking for more work and hours (COVID reasons they had their hours cut)

When they applied for UC, it was declined because of having too many savings. They don’t have savings so think this was the equity in the property

I’m just checking this is correct, this is classed as savings and technically something they should live on, even though they secured a home with it?

Wasn’t looking for help with housing but tax credits perhaps to help whilst looking for extra hours. They couldn’t afford to rent on their salary without renting away all the equity.

Thanks I am just checking this is correct, does this mean homeowners cannot access UC or CTC type support at all

There are no tax credits on UC, it is a completely different benefit. UC is made up of different elements that people are entitled to claim and then this total is reduced by earnings. So this person would get a standard single element for themselves, 2 x childrens elements and a rent element to help with the rental part of their shared ownership. The first £292 of earnings are disregarded then after that wages would reduce the amount. If the children are school aged then the person may need to look for more hours which he/ she is anyway.

I've come across this problem with a client fairly recently. Some eejit at DWP couldn't get their head round the idea that shared ownership meant you rented part and bought the remainder, and assumed that because the client had a tenancy agreement and rent liability, they weren't living in the property they owned, and therefore it counted as capital.

It was sorted out easily, I drafted a form of words for the client to use in a note to their work coach, and they had to take in some paperwork re the property purchase.