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Original poster

Claiming Universal Credit and Having additional properties

33 replies

Googleboxfan · 13/07/2021 08:28

Hello. Can someone please explain how this works as I am being a but thick..
I may need to claim Universal Credit in the very near future. I have 1 DD.

Me and STBXW have 2 rental properties. They are both in negative equity and the rent we receive only just covers mortgage and insurance. No profit is made.

I don't know how to input this on the UC application as I don't receive an income for them.

Can some kind person please help me.

Thank you

OP posts:
BernadetteRostankowskiWolowitz · 13/07/2021 08:33

What will your living situation be? Will you request help towards housing? In which case I dont think you would be eligible as you have properties you could live in

LIZS · 13/07/2021 08:37

Surely the rent is income regardless of the associated outgoings.

riseandshine2021 · 13/07/2021 08:45

The rent is still counted as income despite going on the mortgage. You must declare this.

Buttons294749 · 13/07/2021 08:47

You do receive and income. You should also be paying tax on the income...

VanCleefArpels · 13/07/2021 08:51

The value of the asset has to be declared. It makes no difference if the value of the asset is currently less than you pays for it. It has a value and as I’m guessing it is more than £16k you will not qualify for benefits.

www.entitledto.co.uk/help/Own-other-property

Svalberg · 13/07/2021 08:51

@Buttons294749

You do receive and income. You should also be paying tax on the income...
Which will be nil if it only covers the mortgage interest and insurance, and annual gas check and other allowable costs
LIZS · 13/07/2021 08:53

I thought Mortgage interest is no longer offset.

Buttons294749 · 13/07/2021 08:53

He said that it only covered the mortgage not mortgage interest

VanCleefArpels · 13/07/2021 10:50

I’m a landlord. Not all expenses are set off 100% from tax liability - and the categories of set off are more and more limited. And even if liability is net zero you still have to do a return

But we are straying off the subject. The mere fact of ownership means there is no claim for UC.

MyDcAreMarvel · 13/07/2021 10:54

@Googleboxfan these are the experts , post here. You will need to wait until 5-7pm tonight.
www.facebook.com/groups/UCEssentials/?ref=share

mumwon · 13/07/2021 10:59

owning property is capital & you as a couple are a only allowed £16000 & even you get a decreased amount over £5000 (I think that's the figure) so for each pound over £5000 you have a percentage of UC deducted (but id you have dc the lower figure is increased)
If you own the house you live in (now) you don't get the housing benefit part but a loan
If you don't declare this I believe it constitutes a criminal offence

Check this on the turn2us website or gov.uk

Babyroobs · 13/07/2021 11:21

You cannot claim Uc with assets over 16k.

Original poster
Googleboxfan · 13/07/2021 12:29

The properties are both in negative equity. So mortgage on them is 87k and properties are both worth 87k.
Rent we receive pays for interest in mortgage And CP12 only

OP posts:
LIZS · 13/07/2021 12:30

Does not matter, technically they are capital assets.

sempiternal · 13/07/2021 12:35

As I understand it, you would be deemed as having capital over 16k and therefore can't claim UC. Essentially you're expected to sell the properties and use the funds to live on.

QueenCarrot · 13/07/2021 12:55

Dear Lord, has nobody read that link?

‘For the purposes of calculating the amount of that property which counts as capital, you should take the current market value ('surrender value') of the property, and reduce the amount by 10% if there would be a cost involved in selling the property. This is because the value of capital taken into account in the means test is reduced by 10% to cover any expenses involved in selling.

You should then deduct from the remaining amount any debts secured on the property such as a mortgage. The amount left is your capital to be taken into account when calculating your means-tested benefits. If there are no selling costs, and no debts secured, then the entire amount is counted as capital.’

So although it’s counted as capital it won’t take you over the £16K limit based on what you’ve said (or even the £6 grand threshold where benefit starts to reduce).

The income is a different matter and you must declare that but no idea how they will calculate it for UC purposes.

footballsnotcominghome · 13/07/2021 14:36

The capital is not an issue but the income is as I don't think you can claim all the interest as tax deductible anymore. How much do you declare on your tax return? That should give you some idea.

Original poster
Googleboxfan · 13/07/2021 15:13

@footballsnotcominghome

The capital is not an issue but the income is as I don't think you can claim all the interest as tax deductible anymore. How much do you declare on your tax return? That should give you some idea.
This is the thing I don't know any of this information as stbxw does this all and denied access to me as she's changed passwords on our laptop and Onedrive
OP posts:
Caramellatteplease · 13/07/2021 15:19

When I looked into it I think you can set yourself up as a ltd company and have the ltd company own the property. You can then count the mortgage as a cost and employ yourself through the limited company. But this only works if the limited company doesn't make a profit and your hours and pay are right and you comply with the appropriate regulations

TakeYourFinalPosition · 13/07/2021 15:24

As more recent posts have said, the capital isn't the issue - but the rental income may well be, because you can't claim all expenses as being tax deductible anymore.

TakeYourFinalPosition · 13/07/2021 15:26

This is the thing I don't know any of this information as stbxw does this all and denied access to me as she's changed passwords on our laptop and Onedrive

Does she do your tax return too?

When I looked into it I think you can set yourself up as a ltd company and have the ltd company own the property.

I believe you have to be MASSIVELY careful with this, and that it'd likely be considered too late to do now. It's also probably not a good idea to open a Ltd company with an ex-partner who isn't behaving very amicably...

If you take that route, take good advice from a qualified accountant/solicitor first.

Svalberg · 13/07/2021 15:40

@LIZS

I thought Mortgage interest is no longer offset.
Not directly but it's covered if you're a basic rate taxpayer
daffyluck · 13/07/2021 18:04

@Googleboxfan please get some proper advice from someone who knows the UC rules.

There is so much wrong advice on this thread. Those who are saying rental income is taken into account for UC - can you point to the actual regulations that say that?

If you own a second property and rent it out, the rental income is not taken into account for UC. The capital value is. The tax position is irrelevant.

Babyroobs · 13/07/2021 18:15

It's the capital/ equity that is relevant to UC. However when there is no equity I'm not sure where you stand. It seems absurd that someone with a share in owning 3 houses could claim means tested benefits but it may be possible if no equity in them. I think they look at the equity minus 10%. Are they going to be sold.?

IcedSpice · 13/07/2021 18:20

Are you able to live in one of the properties