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Original poster

Anyone know how having 2nd property affects benefit claim?

29 replies

onlygotonelife · 19/04/2009 16:58

Am in horrendous debt due to ex, currently sahm with 2 pre school kids, youngest 6months.

all debts, but also assets in my name

have put in claim for IS etc, but need to supply more info.

Have a flat rented out,which doesn't make any profit after mortgage and service charges.

Will I have to sell flat to get any help? Would they help me til it sold if so?

Was hoping not to sell yet as hoped to see if prices increase so can pay off some debt, otherwise probably would just about repay mortgage. Can't even afford any upfront costs of selling - does the hip have to be paid forin advance?

Pretty desperate at moment.

Can they turn down my claim because of the flat? Even though I have no money? Help!

OP posts:
LIZS · 19/04/2009 17:01

Think it will count as an asset , even if non profit making.

HappyMummyOfOne · 19/04/2009 17:52

Any equity in the property will be counted as income so if it takes you over the threashold for IS savings you wont qualify. They will check that no profit is being made but certain parts dont count like the service charge etc. Its usually very hard to claim IS when S/E renting a house out.

HB is also restricted in that there are strict restrictions on people claiming who own property.

Original poster
onlygotonelife · 19/04/2009 18:14

So does that mean that as long as there's not £16k between what I owe the mortgage co,and its current value, I could still get IS? I have a mortgage myself,but that's in arrears, and looks like the flat will go into arrears this month, because the tenant is having issues with her HB payments.

If I don't qualify, what am I supposed to do? Obviously can look for a job, but it will not be easy to find something paying me enough to manage. In the meantime, can they just let me starve? Do they ever take debt into account?

OP posts:
HappyMummyOfOne · 19/04/2009 18:42

They dont take debt into account, only incomings.

If you have between 6k and 16k then they will reduce your IS to take into account the capital. Under 6k in savings/capital you are allowed to have. However, as stated, they will see you as s/e and you can only offset certain expenses so this may still exclude you from IS anyway.

Tax credits and child benefit will still apply and the maintenance for the children. You can keep £20 a week of this if on IS, if the maintenance is more than the IS amount you would be expected to use that and not claim IS.

If you sell the other property, you may be subject to CGT and obviously any cash left over after paying the mortgage can affect means tested benefits.

Original poster
onlygotonelife · 19/04/2009 18:56

Hmm, all bit worrying
Tax wise don't make profit, so can qualify for full child tax credits, but if don't get any benefit will have to survive on about £500 a month! Ex just demands money - only in debt because of him.
My mortgage is £1k, loan and cc repayments probably £600, plus bills and food etc.... don't think £500 going to stretch far.

1 estate agent did a valuation about 5 months ago, which would have meant about 6k equity, so might be less now.

Otherwise looks like could end up repossessed and bankrupt. Guess then they would have to help me

OP posts:
expatinscotland · 19/04/2009 21:21

Please try to find a job soon.

Original poster
onlygotonelife · 19/04/2009 22:09

Expat, have to look, but not even sure how much I would have to earn to cover even the basics plus childcare. In my last job I earned about £25k, that sort of money wouldn't be enough. Feeling a bit despairing about my whole situation tbh, but that's not very helpful

OP posts:
expatinscotland · 19/04/2009 22:12

£25K wouldn't be enough? Are you in London?

You could still get child tax credits to help with childcare.

But tbh you're really going to struggle getting by with this property, because you can't get housing or council tax benefit, so even if you did get IS, and that's a big if, you would be responsible for your rent and council tax.

FAQinglovely · 19/04/2009 22:18

I feel for your only - my DH is in a similar position, running up massive arrears on his mortgage, can't claim HB - as he can't sell the house he owns, so therefore he can't afford to rent anywhere. He will qualify for the help with interest on the mortgage at the end of next month but other than that is trying to pay (haha) approx £1700month of bills on £60.50 a week.

He has huge debts, if he gets a job then he loses the help with the interest payments leaving him right back (and worse) than where he started unless it's a fairly decently paid job. So then he starts the whole process again with the repossession, he's tried to sell - no-one has took the bait - and if he sold now he's be in negative equity (massively) more than likely, leaving him with more debt.

So if he' working when the house is repossessed he'll have to rent privately but the he'll struggle to find anyhwere he can afford that will take him (apppalling credit rating). Gawd it's bloody visious circle so I feel for you OP

With regards to the HIP no you don't have to pay it in advance, when DH put the house on the market he had an arragement where it would be paid for when the house sold. House didn't sell (and he's now living there with no option to go elsewhere for the time being so has temporarily taken it off the market) and they agreed to monthly payments to pay for the HIP that had been done.

FAQinglovely · 19/04/2009 22:19

Expat - if she has debts to repay then it's perfectly feasible that £25k wouldn't cover it.

expatinscotland · 19/04/2009 22:21

I'd actually consider bankrupcy in her case then, FAQ.

It's not a nice thing to consider, I know.

I had a bankrupcy in the US over 8 years ago and was truly at the end of the rope. Had NO assets, either. Not even a car (was using one of my boyfriend's).

Original poster
onlygotonelife · 19/04/2009 22:22

I am in London.
Currently paying (or not at the moment) mortgage of £1k where i'm living now - not in good state, worth loads less than paid for it, plus huge penalty as tied in mortgage - so not easy to sell home

Rented out property affecting ability to get financial assistance, not making me any money, but ex (who gave me the money for deposit but got me to have in my name because of credit ratings) furious at idea of selling it - even though he has left me with huge debts.

Debts repayments very high, though presume could speak to credit action type people and see what could happen

So if mortgage plus current debt payments = £1,600 before even look at bills, can't see how £25k will cover it.

Also worried because whatever the solution - selling property and/or decent job - it is not going to happen immediately - worried about what will happen in the meantime.

OP posts:
FAQinglovely · 19/04/2009 22:23

got to get someone to take you to court to make you bankrupt if you can't afford to pay for it yourself - and that can take a long time (my brother still waiting 4yrs in!)

LadyMuck · 19/04/2009 22:26

Worth contacting CAB. If your 2nd property is rented out then it may be disregarded as an asset though the income is taken into account (in your case nil).

Original poster
onlygotonelife · 19/04/2009 22:29

FAQ - sounds very similar to your DH - it's a horrible position to be in,and there doesn't seem to be any easy solution

Bankruptcy - don't even know the implications of it, but not good, and feel so bitter that I've allowed someone else to put me in this position - never even had a credit card til I met ex

OP posts:
expatinscotland · 19/04/2009 22:30

'If your 2nd property is rented out then it may be disregarded as an asset though the income is taken into account (in your case nil). '

The trouble is that you can't get HB or CTB so even if you get on IS you don't get the full whack of benefits.

FAQinglovely · 19/04/2009 22:30

onlygotonelife - Lou33 was recently made bankrupt I believe (after having also been saddled with massive debts from her ex) I'm sure she could tell you more

expatinscotland · 19/04/2009 22:37

Yes, I remember that.

I will say, the build up towards bankrupcy is awful.

You struggle with debts, sometimes for years and then it all comes to a head and it's terrible.

But the relief, the relief once it's all done.

Original poster
onlygotonelife · 19/04/2009 22:46

Tbh I'd rather try and find some way of managing the situation if possible. Apart from bankruptcy, seems these are options!

1: Amazingly well paid job
2: temporary benefits (but not sure if will qualify - if could just get IS and mortgage interest payments would at least be a start) til hopefully property prices recover, can then sell, pay back debt, get job to pay enough to live on
3: win lotto
4: get swept off feet by multi millionaire

OP posts:
expatinscotland · 19/04/2009 22:48

the problem with getting mortgage interest covered is that it works like HB. you already have another property that, technically and from their point of you, you could use as an abode.

think you'd best see CAB.

FAQinglovely · 19/04/2009 22:50

oh that's a good point about the 2nd property and interest payments expat - hadn't thought of that as DH doesn't have that problem.

expatinscotland · 19/04/2009 22:52

Yes, FAQ, the mortgage interest thing is designed for people who have only one home and are about to lose it, not to keep someone from having to flog a second property or even from bankrupcy.

But to literally keep a person off the street.

FAQinglovely · 19/04/2009 22:54

you know the ironic thing is that when DH gets his help with the interest the threat of repossession will go away only to replaced by the threat of being made bankrupt

expatinscotland · 19/04/2009 22:56

Yes, but I think the government sees it as better bankrupt than homeless, and I have to say I agree with them.

So it's essentially housing benefit for homeowners who are out of work and the qualifications are much the same.

Original poster
onlygotonelife · 19/04/2009 23:03

WellI don't want to keep the 2nd property for any other reason than a possible solution to the debt problems - I don't think that the government should pay for me to have somewhere to live while I rake in tons of profit at some point, leaving me very comfortably off.

All I want is a safe home for me and the kids, enough money to live, however frugally, and a way to pay back the debts

OP posts:
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