CTC TO Universal credit with second property

[mumof5andfat]

Hi all,
any advice would be appreciated. I was recently transferred over to UC from CTC after I received a migration notice. As I own a second property, i didn't think i'd get anything but still made the application as i was getting a small amount of CTC. They're now asking me to fill a A64A form out for the property i own jointly with my husband, but not the property we live in. I'm wondering if its even worth doing or shall i just stop the claim altogether if I'm not going to get anything. I thought that there was a 12 month transitional protection or something to that effect. am i right? if no such thing exists, i might as well just stop the whole thing now. The whole reason we got the property is because my husband works but has a degenerative condition which means that he will need to stop work in a few years when it gets impossible for him to continue working. We wanted the property to serve as a backup source of income for us when that eventuality happens.

Does this help:

https://revenuebenefits.org.uk/universal-credit/guidance/existing-tax-credit-claimants/managed-migration/transitional-protection/

Generally, if you're migrated from Tax Credits to UC, and meet some conditions then capital over £16k is disrgarded for a year. You will though be treated as having tariff income.

On the face I cannot see anything there to indicate real property (ie land and buildings) is treated differently to cash and investments. As ever my go to would be the guys at Help to Claim, DWP funded but run by Citizens Advice, on 0800 144 8 444.

The home you live in is disregarded. The valuation form you mention is normal where people have a second property; DWP need the value whatever.

Thank you for this, it helps enormously

Just an update in case anyone else is in a similar boat. I did get the universal credit due to the 1 year transitional protection rule, for some reason, its also higher than what i got under the tax credit system (doesnt make sense to me, but i wont question it). Doubt i will next year though. So after a year, I'll just stop the claim.

Crazy rules paying Uc to people with second homes. It's baffling. Thank goodness it's only for a year. Thank goodness the system is changing.

But that's what child tax credit had been doing for years, (we only purchased the btl a year ago) so I guess it's a good thing that universal credit was introduced.

I am due to go through this process. What does the form ask about? We have two properties so what info do they need- and how do you show the rental income, because i hear its not seen as ‘income’ but added to the capital total. Would you have to provide bank statements?

they will need the rental income, the didn't want to see my estate agent statements (as apparently that was my choice to put it with agents!), a copy of the tenancy agreements, the outstanding mortgage on the properties, latest valuation of the properties (I gave them a Zoopla printout). They will then work out your equity. Rental income is just seen as income. On the application, they will ask you for all bank balances with bank account details. Once the application is submitted, you will most likely be called for a meeting and asked to bring all documents (listed above). The 'meeting' will last a couple of mins, where they check that you put the correct bank balance on the application (by looking at - not taking a copy of - proof of your last 3 months banks statements for each account you mentioned), they take a copy of the documents listed above (not the bank statements) and you then get paid your first month immediately after the 'meeting'. Although note that the amount you get under the Transitional protection of 12 months cannot be less than what you got under TC (unless circumstances have changed since then). I have been told I will not qualify for UC after the 12 months. PM me if you need any further info.

The form is a bit of a 'faff', so make sure you have mortgage account numbers, bank balances with account numbers (partners as well if applicable), wage slips, tenants names, tenancy start dates and rental amounts etc.. to hand before you start and it will be fine.

I’ll be honest, I’m astounded you qualify with a second property.

It is the value in the property.For example.If it were a £ 200 000 property, with a £175 000 mortgage equals £25 000 equity.That would mean you would not get UC as it is more than the £16 000 you are allowed to have before UC stops. However there is a one year transitional relief so you get UC for one year and then it stops.

It's not really a second home, it's an income stream? And once all the costs are accounted for, I'd bet the profit is a lot less than income earned from a job.

People were outraged that a single mother of 2 disabled children was claiming a lot of UC yet people seem to be calm about the fact people on TC/ UC can own a second home and still get benefits.

You can on TC but not on UC except for a one year exception.

But the equity in the 2nd property is taken into account.Over £16 000 in 2nd property wipes out UC after the first year transition.

Its not actually fully owned until its paid off though is it. No one will pay off a mortgage by receiving UC for 12 months.
You wouldn’t normally qualify under UC but as this was under Managed migration from tax credits they have disregarded the property just as tax credits did.

I understand the rules around TP but it is still very wrong that claimants got to claim TC while owning a second home and are allowed a years UC under the same circumstances.

@mumof5andfat is rental income being deducted £/£ from your UC?

I don't think it should be as only income listed in Reg 66 of UC Regs 2013 is treated as unearned income. Rent is not listed.

Unless of course there is something in the Transitional stuff for those coming of tax credits to say it's treated differently.

The rental income from the second property is added to the notional capital from a potential sale as capital (rather than income) each time it's received.

Value minus 10% sellers fees of minus outstanding mortgage equals X add on monthly rent and this will determine what capital is for UC purposes.

If what is left with is over £16k then no entitlement. If between £6000 and £16000 then notional income kicks in

ADM guidance on the treatment of rental income from a non-disregarded second property is in para H5094 of chapter H5 of the ADM assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/965132/admh5.pdf. 

Bloody hell. The sooner the benefits system is overhauled the better. It's utter madness.

It's a transitional arrangement so that people have time to sort themselves out.

Why Tax Credits ignored capital is a different question but as they did....

@Carolwithane I don't think there is any difference between disregarded property and non disregarded producing income such as rent though IIRC legacy benefits did have some differentiation.

Is there any link to the A64A form that is required to be completed to inform UC- googling it brings up a form regarding parental orders but i know it is a A64A form that one is asked to complete. Would be easier to start getting everything together that UC will require

Would there be a deduction of UC due to having capital over £16k because of a second property.
Some are stating a deduction of £174/month..

Yes.

Did you manage to find any link to the A64A form online? and not form regarding parental orders.