Benefits help...

[jaffacakefan]

Hi all,
I am in a tricky situation financially and wonder if anyone can advise me please.

My husband and I have a mortgage on a home that we rent out to a family member as we outgrew it. We now privately rent the home we live in with two children

If we separated, as it's looking likely, I would need to claim universal credit to supplement my 20 thousand a year job to pay rent and bills etc.

Where do I stand with regards to fact we own a house, we have equity etc? In the long term we would sell it I should think but that doesn't help the immediate situation?? Any advice?

Do a benifits check.
Turn2us is pretty accurate.

Generally any equity in the property is treated as capital, and any rent you recieve I think is treated as income minus the mortgage repayment.

You can have up to 6k worth of savings I believe for means tested benefits, so if the equity in the property is greater than this it will reduce payments.

But the capital locked into the house won't pay the rent :( when I do entitied to check with out the house equity, I can quoted 600 support, which at a stretch I could live on with my salary. With house declared its 80... and I can't. Really don't know what to do. We can't sell house before split, it's going to get messy :((

I know, it’s difficult. But you have to declare equity because they will find out about the house and then you’re looking at fines and paying back thousands of pounds.

It’s a really tough situation I know, but from the government point of view, you have money available even if it is tied up in property.

Give notice to family and move back into your property?

8 years ago I was in a similar position. Marital home rented out, I was on tax credits. I had to declare the rental income on my tax return (minus mortgage interest payments) but I don't think the equity in the house came into the equation. May be different now of course.

Mortgage tax relief has now gone so unable to deduct that but you claim some basic rate reductions: www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords
Also look into the CGT position if you sell up.

If you let out a property you must already be completing tax returns so you can hardly avoid declaring it!

Surely if you earn 20000 you aren't entitled to any benefits?

I wasn't going to avoid declaring it! My salary gives me a take home of 1500 a month. With rent at 1050, I can't pay bills food and petrol on remaining. So yes entitled to support for housing and tax credits

Long term the house would sell and we would pay off debts. Short term I can't pay rent alone.

The house is one bed, we can't all three of us fit!

Can you and the children not move somewhere cheaper? A 2 bed flat? That’s the only way I can see you being able to do it. Even if it’s a grotty place it’s only until the house sells and you pay off debts and then can move.

Sure. But for benefits purposes you will have to include the income you are getting from your property too.

You will be entitled to benefits... wtc and ctc . I am on a similar wage though and not entitled to help with rent or council tax. Inbox me if you need anymore help.

Have you factored in CM payments too in your monthly income?

I am a single mum of 4 earning £20000 and I recieve CTC And CB.

I suspect they will tell you to sell the house.

It would be the income you declare not the equity.

Here is my understanding

If you own a house worth £200,000 and live in it, you are entitled to benefits.

If you own a house worth £100,000 and live in it, plus own another house worth £100,000 and rent it out, then the second property counts as savings and you aren’t entitled to anything.

No. The equity counts as well, for a second property.

If the sale of the house is subject to divorce proceedings, and the divorce is ongoing, they won’t take into account the equity until after the divorce. Even while the house is on the market it should be disregarded.

Time to sort out selling the 1 bed unless your spouse is going to move into it? In which case they are going to have to give you a share of the equity/carry on helping you pay the rent.

In abusive situations you can get housing help whilst still owning a property that your spouse/partner lives in but you have to be also in the process of divorcing/selling the property.

Depends on area, if you can still apply for tax credit it's just the income to declare so you will probably still qualify. However if you are in a universal credit area all payments stop if you have more than 16,000 in assets, including equity.

Not sure if this will work but would ex (if you're on good enough terms to ask) be able to move in, then it's still owner occupied so might no be considered an investment anymore.

I can't rent my own place, no deposit or month in advance.
Might ask him to sign house over into his name, then it's not my asset.
Otherwise I'm stuck, and will have to just carry on this miserable eggshell walking exhausting existence for next forty years :((

If you are married a house etc is a joint asset regardless. Either one of you moves back into it or sell up.

Either way long term you will not be eligible for housing benefit whilst owning a house.

I work In benefits, only the rental income will be taken into consideration not the capital. (If it was empty the capital would be taken into consideration).

If you sign away an asset it will still be taken into consideration as a decision would be made that you did it so to claim benefits.

But universal credit considers it an asset , so either way I have no choice. Thank you all for your advice and knowledge.

As I'm in a universal credit area.