The prevailing economic situation has thrown many people in unfamiliar territory financially. Whether you’re just starting life or are living in your retirement years, money is tight. For some people, there may be some reprieve if you qualify to receive benefits.
Even then, if you’re thinking of selling your house but are currently benefiting from universal credit, you may want to stop and think about the implications of your decision first. That is, what impact will it have on your entitlement? You certainly don’t want to lose this benefit.
Selling your house fast may seem convenient now only to end up affecting your eligibility for benefits. Here’s what you may not know; although the value of your property isn’t taken into consideration if that is your primary residence, any proceeds from the sale of the property counts.
Many people find themselves in this dilemma simply because they don’t have the right information. As such, you will do well to take time to research and understand what the benefits mean before charting the way forward on the sale of your property. This will clear any doubts you may have and the effect on your universal credit.
What is Universal Credit?
Universal credit is the money payable to individuals who are over 18 years but don’t qualify for State Pension age and are either out of work or on low income. It encompasses support for childcare and children, housing, people who are too ill to work, carers and financial support for people living with disabilities. Simply put, it’s money that is paid monthly to help ease the cost of living. You can receive universal credit if you can’t work, are out of work or have low income.
For the avoidance of doubt, you need to know that universal Credit covers the following tax credits and benefits:
- Income Support
- Child Tax Benefit
- Housing Benefit
- Working Tax Credit
- Income-related Employment and Support Allowance (ESA)
- Income-based Jobseeker’s Allowance (JSA)
If you’re already receiving any of these tax credits or benefits, then you must understand some of the reasons that could affect your Universal Credit payment.
Will Selling Your House Affect Your Universal Credit Claim?
Any income you receive from investments and assets is classified as capital. Any capital valued between £6,001 and £16,000 will affect how much you receive in Universal Credit. Every £250 above £6,000 will lessen your Universal Credit by £4.35 every month. Where it isn’t a complete £250, then the figure is rounded up to the next £250.
With a capital of £6,250 or less, you can expect to receive £4.35 less on your Universal Credit until you have a capital of £6,000 or less. With a capital of £6,000 or less, there’ll be no more deduction to your Universal Credit.
If your capital stands at £16,000 or more, you’re not eligible for Universal Credit.
Capital disregards refers to the amounts of capital that aren’t included when determining how much you can get as Universal Credit. They include:
- The land or premises where you currently live
- Business assets
- Personal and occupational pensions
You can speak to your coach for further information as this is not a comprehensive list.
If you have regular income besides your earnings, it’ll be treated income that isn’t earned meaning your Universal Credit lessens. Some of the unearned income includes student income, pension payment, training and employment payments that are payable for living expenses or as a substitute for Universal Credit. Again, that is not all as there are other considerations.
You’re also likely to get deductions to your Universal Credit when you:
- Have a sanction.
- Have a penalty for fraud.
- Have a hardship payment.
- Have Universal Credit advance.
- Are a recipient of Tax Credit overpayments.
- Owe a third-party supplier money for electricity or gas.
Your allocation for Universal Credit could be reduced when you don’t meet responsibilities spelt out in your commitment and can’t offer a good explanation. This is a sanction. In the case of a sanction, you’ll be informed about the percentage of your payment that you’ll lose.
Does Selling your House Result in Loss of your Housing Benefit?
Yes.
As a recipient of housing benefits, if you decide to sell your house fast, then the government will assume you have earned a noteworthy sum in cash, so you no longer require housing benefit. So, when you sell your property and make a claim for your housing benefits, the local authority will look for information about the sale of your property in the Land Registry to see the amount you sold your house to determine surplus capital. As such, be sure to declare surplus since they expect to see information in your records. If there are discrepancies be sure to explain so it’s not assumed that you’ll receive the whole amount.
If you want to sell your house, you can still qualify for Universal Credit if:
- You’re unemployed or have an income of £16,000.00 or less.
- You’re eligible for or are already a recipient of a disability premium.
- You have reached the age for state pension.
- You are residing in temporary accommodation.
- You’re residing in sheltered housing with special amenities and facilities like alarms and wardens.
If you don’t satisfy this criterion, then you can consider filing a claim for universal credit. You can use a benefits calculator to check if you’re eligible.
In Summary..
If you still aren’t sure of the effect of selling your property to your UC, you must consider talking to an expert to guide you through the claims process. You can consider placing a call to the Universal Credit helpline. Only then can you decide on whether you’ll sell your house fast to a house buying company or put it up for sale on the traditional property market.
