benefits and inheritance

[staceysmom1]

Hi everyone. I would appreciate any advice if anyone has any ideas. I'll try to keep it as short as possible!

So back in December, I lost my job that I had been in for over 10 years. I made a claim for JSA New Style and that has been my only income since for the majority of the time (I found another job in April, but unfortunately they let me go again after two months as there wasn't enough work for me after all). I was not expecting it to be this difficult. I am quickly approaching the end date of the JSA, and will have no income at this point.

I will therefore put in a claim for Universal Credit. BUT there is a potential problem.

My dad passed away back in 2019. He left two properties that were to be shared between myself and my brother - his 2 bedroom bungalow, which I have also lived in for a number of years as I was his full time carer before his passing.... and a holiday flat that he was using to generate extra income to supplement his pension.

I decided that I would like to remain in the bungalow, and have my daughter move in to the now spare bedroom. My brother was fine with that because he wanted to take control of the holiday flat as his source of income anyway. He has rented his own flat for many years, and he does not want to move out of his property either. We therefore asked the solicitor if I could be registered on the bungalow, and my brother on the flat.

The solicitors came back, however, and said that as there is a significant difference in the valuation of the properties (£190k for the bungalow and £130k for the flat) that in order to do that, I would need to pay my brother £30k to ensure both beneficiaries received 50% each. I could not afford to do this. They said that the next best thing, then, would be to have both properties in both our names, to ensure that we both receive the same amount of money should they be sold in the future. What we do with them beyond this is our prerogative.

So this is what we did. So We both have a £95k share of the bungalow, and £65k share of the flat, and we have the letter from the solicitor outlining this.

My question is basically, how do you think this will be viewed by the DWP? I'm just wanting to claim the standard allowance.

I know I can put in a claim and let them decide, but I guess I'd prefer to get some ideas if possible first, while I still have some time to prepare for it!

Many thanks in advance for any help you can give :)

It will be viewed for what it is. You have a property that you do not live in so that will be considered an asset and as your share of the asset is more than 16k you will not be able to receive UC. There is no way around this.
It would have been better for you to keep the bungalow and take out a small mortgage to pay your brother his 30k. This then would have had no bearing on your UC as you only have the house that you live in and nothing else.

What we do with them beyond this is our prerogative.

I can’t answer the question, but might the above mean that your brother can elect to have his name taken off your property deeds now, and you do the same with his? (So that you both own one property each - as per your original plan?)

The property you don't reside in is classed as an asset, worth many hundreds of thousands, so you probably won't get anything.
If you have 16k you get nothing. If you have 6k plus you get a reduced amount. They'll expect you to sell it or rent it out. UC is for people with very little savings or assets.

You won't be entitled to uc as you have assets above 16k that are in addition to the property that you live in.

Are you getting half the holiday rental income ?

Ideally you needed your brother to take full ownership of the holiday home and a percentage of your property. The solicitor idea was a bit bonkers with one property creating an income.

What you need to get to is the market value of your share of the property you do not live in.

This is not necessarily a share of it's value with vacant possession.

The danger of any adjustment between you and your brother is that you might be seen as having deprived yourself.

@Miley1967 @VWT5

Thank you both for replying so quickly!

In hindsight, looking at getting a mortgage would probably have been a good idea. Unfortunately, I have never been unemployed so didn't even think of the implications of this whole scenario. Maybe this option is still on the table, so thank you for that thought.

If it would be possible to just put names on / take names off at this point, that would be a great option, so will definitely explore this. I'm very lucky that my brother and I always work out what's fair between us without needing to get the law involved

You have done the inheriting now, so nothing to stop you transferring ownership back to each other. You could draw up a contract to pay him the £30k when you can get a mortgage. You should be able to borrow that on even a low wage. Not sure if that would be looked upon as deprivation of assets for benefits though. Can you get a job in a supermarket etc for now? It sounds like your daughter is grown up, so you can hopefully be flexible with hours.

Thanks for everyone's responses :) Yeah, unfortunately I think the problem here is how it's been divided up.

I don't receive anything from the holiday flat - this is solely my brothers business now. But equally, I do not pay him any sort of rent for his share of the bungalow.

Here's hoping I can just find a new job ASAP!

just take your names off each others properties and discuss how to balance the discrepancy

@SprigatitoYouAndIKnow

Yes - I definitely don't want to go and start doing anything that would be considered fraudulent!

my daughter is indeed an adult now so I can be totally flexible with hours. I have been applying for anything and everything - part time, seasonal, full time. I have had several interviews and so far nothing. I actually had an interview with Tesco last week, so here's hoping!

It sounds like you should receive a share of the rental income for the property you don't live in.

Do you know how much your brother is making from the property?

I'm as lefty as they come but you sell your assets when you have a rainy day. That's why we accumulate savings or assets, if we can. The social security system is a fall back for people who can't.

@Gingerkittykat I don't actually, but it probably would be more than half the going rental rate on this place. So that is another factor to consider - thank you.

@Summerhillsquare I actually do fully appreciate your point of view as a fellow lefty. But unfortunately, I find myself in a situation where I can't just make the decision to dispose of assets (no way my brother would agree to sell the flat - that would definitely end up needing to go to court). So until I manage to sort something out, I'm cash poor. This is why I'm here asking people for advice / suggestions. It probably does sound awfully entitled - I understand I am in a privileged position. But I'm sure there are other people out there who have experienced similar and understand how this sort of thing can make you feel a bit stuck.

You need to sell your share of the other property to your brother in exchange for him giving up an equivalent value in the bungalow.

You need to think about capital gains tax if your share of the other property has increased in value subsequently.

Hopefully your brother can agree to wait until you are back working before you try to get a mortgage to buy out his remaining share of the bungalow.

If she starts asking for that then the brother could (and should) start asking for rent for the bungalow.

Sign over your share of the flat to your brother and adjust the ownership of the bungalow so he owns a little more.

Your solicitor should have said brother could have the flat plus a % stake in the bungalow that is worth £30k but he took the easy option and that has caused you a problem.

If you give your brother your half of the flat you will be considered to have willfully deprived yourself of assets - DWP will treat you as though you still own half the flat.

There is no mortgage so there is no debt, so you can’t even get your brother to buy your half of the flat and use it to pay off mortgage debt on the bungalow.

You will have to try to get a solicitor to do an equity exchange to fix, so you end up with £160k equity in the bungalow and brother has the flat and £30k equity in the bungalow.

I suspect this a dodgy situation / prospect to undertake and might not avoid DWP treating you as though you own half the flat.

Personally I think that was poor advice. When you come to sell either property you will have to pay capital gains tax. Your brother shoukd have owned a % of the bungalow as tenants in common.