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Original poster

UC and Inheritance buying own flat

45 replies

Whiteminnowfish · 03/05/2023 18:07

In a few months I will be inheriting between 30 - 40k.

I split from my partner 1 year ago and i am still living in the family home which long term I cannot afford to live in. Ex wants to move back in, so I will have to move out. We have a flat we rent out.
The rental income does not cover the mortgage, as it is out of a fixed rate, so interest rates have risen.

I would move into this flat, but it would be on the basis I can put my inheritance in towards a deposit to remortgage it.

It's currently in negative equity and the mortgage amount is what the property is worth £85k outstanding on mortgage, as we've been paying interest only on the mortgage.

Will this affect my UC?

OP posts:

Chonk · 03/05/2023 18:32

Have you declared the second property (the flat) as capital? If not you're likely being overpaid UC already.

Babyroobs · 03/05/2023 18:35

Chonk · 03/05/2023 18:32

Have you declared the second property (the flat) as capital? If not you're likely being overpaid UC already.

They only look at equity in a property you don't live in, so I guess if no equity then op cannot be treated as having capital over 16k. Does seem odd that you can own a second property and still get Uc though.

Babyroobs · 03/05/2023 18:38

Presumably if you move into the flat you will still have equity tied up in the house ( assuming you jointly own it ? ), therefore you won't qualify for Uc if that equity is above 16k ?
As soon as the inheritance hits your bank account you will need to declare it and Uc will stop. I believe it can then be used for property if within a certain length of time but you'll still have the problem of the equity in the house. Is your ex going to buy you out of your share ?

Original poster

Whiteminnowfish · 03/05/2023 18:43

Chonk · 03/05/2023 18:32

Have you declared the second property (the flat) as capital? If not you're likely being overpaid UC already.

Yes, 2nd property has been declared. Rental income does not cover mortgage fees, so no income and no equity in property.
As mortgage is what the property is worth.
Only paying interest only

OP posts:

Original poster

Whiteminnowfish · 03/05/2023 18:44

Babyroobs · 03/05/2023 18:38

I don't understand?

So what about other people who have mortgages and claim UC?

Surely they will have equity in their properties?

OP posts:

PaniniHead · 03/05/2023 18:54

Do you jointly own the family home?

Original poster

Whiteminnowfish · 03/05/2023 18:58

PaniniHead · 03/05/2023 18:54

Do you jointly own the family home?

Yes. All properties owned have been declared

OP posts:

Original poster

Whiteminnowfish · 03/05/2023 18:59

PaniniHead · 03/05/2023 18:54

Do you jointly own the family home?

Yes. All properties owned have been declared when I applied.

OP posts:

Original poster

Whiteminnowfish · 03/05/2023 18:59

PaniniHead · 03/05/2023 18:54

Do you jointly own the family home?

Yes. All properties owned have been declared when I applied for UC

OP posts:

Blondey2023 · 03/05/2023 19:00

Whiteminnowfish · 03/05/2023 18:44

I don't understand?

So what about other people who have mortgages and claim UC?

Surely they will have equity in their properties?

Show quote history

I could be wrong, but I read if you have a mortgage UC won't pay you the housing element

RaininSummer · 03/05/2023 19:04

If you live in a house with a mortgage any equity is ignored as it's your main home. However UC will not pay housing costs but after I months help can be requested with the interest but had to be repaid. If you do not live in the property then the equity is considered as assets.

PaniniHead · 03/05/2023 19:04

If you move in to the flat, that will count as your primary home which is fine.
Your family home will need to be redeclared as you don’t intend to live there. The equity will count as capital unless you can prove it is up for sale or it is going to be transferred out of your name.

Blackbyrd · 03/05/2023 19:12

Equity in the family home is disregarded for UC purposes. If you sell a property, any profit can be disregarded for six months to give you time to complete a purchase on a new home. Instead of a Housing Costs Element on your UC claim you have a higher work allowance though this is of course no use to you if you don't qualify for a work allowance on your claim.
Surely though OP, your ex will need to buy you out of your share of the family home? There are a lot of things to be aware of, will you even qualify for a mortgage for the flat? Affordability tests are much stricter now. Your inheritance will disqualify you from receiving UC, once you've secured a new mortgage you could try reclaiming as it is unlikely deprivation of capital rules will apply. However if your share of the equity in the family home exceeds 16K you will still have a problem

Original poster

Whiteminnowfish · 03/05/2023 19:17

I don't receive housing element of UC

OP posts:

Babyroobs · 03/05/2023 19:23

Whiteminnowfish · 03/05/2023 18:44

I don't understand?

So what about other people who have mortgages and claim UC?

Surely they will have equity in their properties?

Show quote history

The equity in a property you live in is disregarded as capital. The equity in a second property is not. So as it stands at the moment you have no equity in the flat so you can claim UC, but if you move into the flat and still have your share of the equity tied up in your house with your ex then you wouldn't qualify for UC. You have 2 properties and 40k inheritance coming.

Blackbyrd · 03/05/2023 19:26

If you don't have Housing Costs Element ie if you don't pay rent, then you have a higher work allowance to "compensate". However not everyone is entitled to a work allowance. OP, you have two things that may disqualify you from receiving UC. Your inheritance and your share of any equity in the ex family home. As you will no longer be living in the family home the equity will no longer be disregarded

Blackbyrd · 03/05/2023 19:27

As Babyroobs said

Original poster

Whiteminnowfish · 03/05/2023 20:27

What if ex can't afford to give me half the equity?

OP posts:

Throwncrumbs · 03/05/2023 20:37

Whiteminnowfish · 03/05/2023 20:27

What if ex can't afford to give me half the equity?

You will need to sell the property, I can’t see how you will get a remortgage if you claim UC, do you work?

Greentree1 · 03/05/2023 20:40

I would cut yourself off from your ex completely and do your own thing with your inheritance. If you have things in common let them work themselves out.

Babyroobs · 03/05/2023 20:46

Whiteminnowfish · 03/05/2023 20:27

What if ex can't afford to give me half the equity?

If he can't remortgage to buy you out of the property then you'll have to sell or forgo the UC ( assuming your share of the equity in this property is over 16k )

Original poster

Whiteminnowfish · 03/05/2023 21:38

How can I force them to sell? This is so stressful

OP posts:

Whisper23 · 03/05/2023 21:42

You should probably get some legal advice re that.

How much equity is there in the family home?

Original poster

Whiteminnowfish · 03/05/2023 21:44

Whisper23 · 03/05/2023 21:42

You should probably get some legal advice re that.

How much equity is there in the family home?

About 40k each

OP posts:

Riverlee · 03/05/2023 21:45

Greentree1 · 03/05/2023 20:40

I would cut yourself off from your ex completely and do your own thing with your inheritance. If you have things in common let them work themselves out.

This. Have a clean break. If he can’t afford to buy you out, you sell the house. Similarly the flat. If it’s joint owned, sell it and move in.

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