Migration to UC questions ie savings etc?

Thanks, so using the money to buy a home you intend to live in will very unlikely be treated as DoC if we spend a large amount at the end of the 12 months transition period which brings us back under 16k savings.
The only issue is it will be so difficult to ensure a) we have enough over 16k for a deposit at the end of the 12 months for a house b) we find a suitable house around the end of the 12 months transition stage and if we don't then we will either have to buy something else which is not likely to be treaded as DoC in order to stay on UC or loose UC and see our savings for a deposit dwindle away with everyday living expenses.

2) is it true that any left over money from living expenses will be subject to the £235 deduction.

3) say if we enter the 12 months transition period over 6k but under 16k and a relative gives us a lump sum to take us over 16k for the sole purpose for a deposit for a house will this stop of UC? If not, how long will they give us to use it for a deposit for a house?

3) Under managed migration your savings must be over £16,000 on the day you make your claim to receive the transitional protection for your savings. They also need to stay above £16,000 for the whole 12 months. If they drop to just £15,999, transitional protection will end immediately. If a relative gives you a voluntary gift a proper audit trail of where the money is from is advisable for both UC and the mortgage lender. Unfortunately, I am reasonably confident for UC purposes it doesn't matter what the money is earmarked for. Cash is cash to the system and is therefore taken into account. The usual advice where family or friends are providing what are quaintly termed "voluntary gifts" is to get them to buy the thing direct to avoid potential suspicion but obviously a mortgage is a bit trickier. If your savings are below £16,000 when you receive your formal migration notice that would be the best time to be gifted money and it should mean your savings are ok. If you have say £15,000 when you migrate and then are gifting money I think you will be stuffed. Mortgage lenders need to know the source of a deposit and that it is clean money so if you go down this route take advice from your mortgage broker/advisor.

1) Oh my, Deprivation of Capital! That's another saga all by itself. Another thing you could be all carefree about when on Tax Credits. Add Deprivation of Capital guidance to your reading list.

Is buying a house reasonable expenditure? What is your predominant and/or significant purpose in buying a house? To buy a home or to dispose of capital to increase your award of benefits? That isn't me being snarky but broadly how the Decision Maker considers it. Buying a house as your main residence is likely reasonable, buying a house to rent out for profit or house other members of your family?? Hmm.

2) I'm afraid I can't help with that one.

Some links to RightsNet and posts involving whether or not the DWP regard using capital to buy a house as deprivation of capital. Unfortunately, it appears they certainly have done in many a case. One reason is that property is an investment that can increase in value and should be treated like any other investment. Definitely an area in which you need specialist advice.

https://www.rightsnet.org.uk/forums/viewthread/19649/#92577

https://www.rightsnet.org.uk/forums/viewthread/10780/#49698

https://www.rightsnet.org.uk/Forums/viewthread/15119/#71497

Thanks. I can certainly see that from those threads UC have seen someone using capital to buy a house as deprevation of capital.
But what about using it to put a deposit down on a house? Is that pretty much the same thing?
What about if we were to put a deposit down on a property before switching over to UC ie when on Tax credits before even getting the migration letter?
I mean people get UC while they have a mortgage and even get a break in their wages if they have a mortgage so how do people buy a house when on UC?
Gosh just don't know what to do?
What if my mother buys a house and rents it to me?
Is having a house but still paying the mortgage considered having capital ie what you have paid already on the loan?

Anyome know if my mother was to use her own money directly to pay for a deposit for a property for us, never even going into our own account? Would that affect our UC if getting UC and between 6k - 16k in savings

Even that option makes me a little nervous as I read this:

https://www.rightsnet.org.uk/forums/viewthread/12063/#55795

At the very end you don't find out what the client ended up doing or what the clients representative advised them to do. There was an argument that the money tranfered from the parent to the solicitor somehow belonged to the UC client and may still needed to be declared to UC and wether UC wpuod consider this a deprevation of capital and if the money belonged to the UC client even briefly. There doesn't seem to be any conclusion in this thread.

I also read this but don't know if theres been any progress with it.

https://www.insidehousing.co.uk/news/government-to-change-universal-credit-rules-to-allow-recipients-to-save-for-a-deposit-76026

Seems like no progress with benefits to bricks.

One of the links you posted says this below. Basically it's a grey area and even if I send my savings on a deposit for a house ot could still be seem as deprevation of capital and notional capital could still be in play correct ??

It’s been tested (repeatedly) in the context of disposing of capital in order to purchase other forms of capital which are disregarded - e.g. annuities. And the caselaw on those cases is absolutely clear; such a purchase absolutely can involve/result in deliberate deprivation. What is crucial is the claimant’s purpose or intention when making the purchase/disposing of the capital - if that purpose is the ‘forbidden purpose’ then they are liable to be caught by the notional capital rules even if what was purchased is something that is subject to a capital disregard. So it really makes no difference what specific type of disregarded capital is purchased - notional capital can still be in play.

neptune1980 wrote:Thanks. I can certainly see that from those threads UC have seen someone using capital to buy a house as deprevation of capital.
But what about using it to put a deposit down on a house? Is that pretty much the same thing?
What about if we were to put a deposit down on a property before switching over to UC ie when on Tax credits before even getting the migration letter?
I mean people get UC while they have a mortgage and even get a break in their wages if they have a mortgage so how do people buy a house when on UC?
Gosh just don't know what to do?
What if my mother buys a house and rents it to me?
Is having a house but still paying the mortgage considered having capital ie what you have paid already on the loan?

Didn't Boris Johnston bring out a scheme where you could buy a house and instead of paying rent to a landlord they would pay your housing benefit towards the morgage. I wonder what happened to that?

I too remember him saying that but then Boris was a one for coming out with a load of old baloney.

Of course, if you are a private landlord, the state has no problem effectively buying you house after house after house by paying people's rent.

Neptune, if a family member was to buy a house for you to rent then that may scream contrived tenancy and the housing element is unlikely to be paid - they can sniff a contrived tenancy like a shark can sense blood in the water. It can look less like a contrived tenancy if the property has previously been rented out and you would also be paying market rent.

One way of looking at your dilemma would be to ask yourself this - if we bought a house and a Decision Maker ruled it as deprivation of capital meaning the notional capital rules come into play, could the Neptune family survive without the UC payments?

Everything you will read on deprivation agrees on this - the expenditure needs to be reasonable for your circumstances. A single person may be ok buying a 1 bedroomed flat, a single person buying a family sized home may be on dodgy ground. As you have read, intention is key. It is for the DWP to prove your intent or significant operative purpose was to spend your money so you would be able to claim UC or receive a higher amount. It doesn't even have to be your "main or predominant purpose", just a significant part of your decision.
Reading the decision maker guidance, it does say no deprivation can occur if the claimant was unaware of the deprivation of capital rules!

Deprivation of capital is a fascinating area (well it is to me). If you read up on the subject you will find cases were benefit tribunals have found no deprivation where people have blown thousands on hookers, drugs and the geegees. Obviously those people had well documented issues so their spending was related to that and deemed fine!

If you don't already know, be aware the DWP can request bank statements going back as far as they like, even from before you started claiming. Failure to provide statements usually results in claims being closed. If a 5 figure sum of money has left your bank account it will be noticed. It may take them a while to contact you but they will. It's too big a sum of money for them to think, well, maybe the washing machine broke and they needed cash for that.

Plenty of stuff I read said some decision makers have been ok with people buying houses, others haven't. Your problem is until you spend your money the DWP will not tell you in advance if it will be ok.

Specialist advice should be able to "steer" you in the right direction. To me buying a house before you migrate to tax credits, or at least getting a mortgage offer in principle and be actively viewing and bidding seems a better option, but those who work in benefits advice/law know may well say otherwise. Housing is a tricky one - maintenance and repair is ok, improvements that increase the value are usually not (unless they are adaptions for a disabled person). I've no idea how they stand on big mortgage overpayments.

One thing that has stuck in my mind reading some of the tribunal cases, was the judge's comment about what did the claimant expect to live on when they had spent their capital - benefits, and that was why they lost their case.

Thanks. But who are the Specialist advisers who should be able to "steer" you in the right direction?

Ok so if a lump sum of 30k will come from a parent to be used as a deposit for a home, we need to ensure it will not affect our UC if we are on UC at the time. How can my mother make the payment and who too so that at no point I would be considered to have access or own that capital and under no obligation to inform UC?
Worried about
P.360 of CPAG 2017/18 states that “Money held by your solicitor normally counts as your capital”

Under solicitors regulations authority (SRA) accounts rules (https://www.sra.org.uk/solicitors/handbook/accountsrules/content.page) client accounts are used to hold client money (13.1): client money is money held or received for a client or as trustee, and all other money which is not office money (12.1 (a)). I’m not sure the third options is applicable, so in this case the money is either directly mine or is held in trust for me.
If the money is mine, at the moment the money appears in the solicitors account there is a reportable change of circs, which would result in the previous decision being superseded to reflect the increased capital. The fact that the money is only there briefly is beside the point. At this point I would have actual capital when the money was transferred into a property I was living in it would fall to be disregarded, but the DWP would be entitled to argue deprivation of capital with resultant notional capital.
The two things I need to think more about are
(1) could it be argued that deprivation of capital rules did not apply?
(2) what if the money was explicitly or by implication held in trust.
But my fear is that I would be obliged to report the change and my entitlement to means tested benefits would end as a result.

Also when you say about there's no way if knowing if the DWP would deem it a deprevation of capital that's so bad as how can anyone live like that.
Say if for instance we got a 30k gift to buy a home from a parent and bought the home and moved in and DWP said that's deprevation of capital we would then not be able to afford the mortgage or even survive. How can anyone live under that kind of dout or worry in the back of their head.
Also the DWP would consider you to still have that 30k and for how many years? Horrible.

Neptune 1980. Don't your parents fancy buying a house to rent out to somebody like you?

One man don't think that's allowed?

neptune1980 wrote:One man don't think that's allowed?

It's a legit business.

Oneman, Neptune's family buying them a house to rent would highly likely to be classed as a contrived tenancy and would probably mean no award of the housing element.

Specialist advisors.

Previously I suggested giving the Citizens Advice Help to Claim Service a wide berth to help you with managed migration. I would however contact them for a normal advisor appointed regarding the potential deprivation of capital issue that may arise when you migrate to UC - this is bread & butter work to them and they would be my first port of call. On a public forum there is no expectation on you to say where exactly in Scotland you live. If you are in or local to a university city with a law school, students (overseen by the lecturers) often provide free advice clinics. What used to be known as law centres still live on in big cities - solicitors will do free advice work. In most reasonably sized towns and cities there will be community/welfare rights groups who off advice on social security law and decisions - your best bet to find them is be creative with the googling - they will often have 'unemployed', 'poverty' related words in the names and lots do employ welfare rights advisors. There will likely be quite a few in Glasgow and Edinburgh - they may be able to point you to a service more local to you if you don't reside in Glasgow or Edinburgh. Don't be put off by the bolshy tones some of these groups can give off - they frequently know their stuff or people who do. If your wife is a member of a trade union she may be able to access a bit of free advice that way. Do Shelter exist in Scotland? They do far more than lobby about homelessness, and have advisors available. The non-free option would be to consult a solicitor who practices social security law.

You have mentioned yourself and your children receive health related benefits. A qualified advisor ought to be good at recognising if any of these health issues make it more reasonable for you to be buying a property and that may strengthen your hand against arguments you are depriving yourself of capital.

I will have a go at your other points later.

If a family member gifts you money, you and them need to consider what would happen if they later needed to claim means tested benefits or services, such as social care. Your relative could then find themselves being investigated for alleged deprivation of capital. Gifts, be they cash and property, can have significant inheritance tax implications. Tomorrow can never be taken for granted so don't overlook that one!

Don't be disheartened by this. None of it is insurmountable, you just need to be informed of these potential issues and think them through. The issues with a gift for a deposit are nothing extraordinary (I think). Plenty of people get help with deposits and a mortgage advisor should know if could be paid direct from parent to mortgage provider.

Deprivation of capital is more than a DWP issue. Councils make loads of these decisions in relation to social care, housing and council tax benefits. There is a consensus amongst those who make the decisions on these matters that people on means tested benefits are allowed to have nice, shiny things, but they can't buy nice, shiny things as a way of obtaining more benefits. There isn't a list of approved/banned things because the differences in peoples circumstances are too great. That's why spending is always looked at from the point of view of is it reasonable expenditure for a person in their circumstances? The bigger the expenditure and the shorter the time it occurs in, the more suspicions are raised which is why a house purchase will get looked into.

Once you are able to get expert advice you will have a better idea if it is a realistic option. People on means tested benefits have bought houses and been ok. Just don't do anything until you've had proper, informed advice. Lots of people who have been migrated from tax credits to UC have been in the same situation, as have people who have found themselves out of work and on UC. People are often unaware of how when you have even modest savings, if you claim a means tested benefit the state may have a say in how you spend. It's shit, but nobody realistically expects capital thresholds be raised.

Thanks Ign,

Trying hard to find a solicitor who has experience in mortgages for those on benefits whi offer some free advice.
I have spoken to two different welfare rights advisors one who works for the CAB UC advice line and both were very knowledge on this issue and quoted.

The Universal Credit Regulations 2013

UK Statutory Instruments2013 No. 376SCHEDULE 10
Amounts earmarked for special purposes
12. An amount deposited with a housing association as a condition of the person occupying premises as their home.
13. An amount received within the past 6 months which is to be used for the purchase of premises that the person intends to occupy as their home where that amount—
(a)is attributable to the proceeds of the sale of premises formerly occupied by the person as their home;

(b)has been deposited with a housing association as mentioned in paragraph 12; or

(c)is a grant made to the person for the sole purpose of the purchase of a home.

In particular they singled out the last part (c).
And also shared this with me which quoted the same thing as above from the official UC government guidance.

https://www.uceplus.co.uk/disregarded-capital

Advice on deprivation of capital is usually a matter for a solicitor who practices social security/benefits law. A housing solicitor may not have that knowledge and may refer you on. Paying a solicitor might be a good long term investment. A few hundred pounds may make you go ouch but the long term value of the advice could be worth an awful lot more if it keeps you on the right side of the DWP.

If a relative is seriously considering buying a house for you to rent from them as I said earlier they can spot contrived tenancies and then they refuse to pay the housing element. However, people do rent from family and get housing element paid because they have an obvious commercial landlord - tenant relationship.

Without wishing to stray too far into the contentious territory of Scottish politics, consider contacting your MSP & MP about this. They work for you so don't feel too bad about letting them know how managed migration will adversely affect you and your family. The SNP are usually very adept at putting the blame for things on "Westminster". Abolition of tax credits and making lots of people worse off was a Tory brainwave. The Scottish government have made some changes to welfare policy, such as redoing DLA and PIP, but they don't appear to have been too bothered about changing the shitshow that is UC, despite having the authority to make welfare policy. I'm always a bit surprised by that.

If you have a job and then buy a house first and you then lose that job only then will they not see it as deprivation of capital.