The cost of living crisis and higher interest rates have left many sellers wondering if they should sell their homes and continue to claim Universal Credits.
If money is tight, you may want to release equity by selling your home. However, if you are considering selling your home and currently receiving universal credit, it can impact your benefit entitlement.
It is best to research and understand how the sale of your property will affect your universal credit before taking any steps. This will clear up any doubts and help you make an informed decision.
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What is Universal Credit?
Universal Credit is money provided to people aged 18 and over who are not old enough to receive a State Pension and who are either unemployed or on a low income.
It provides financial assistance for childcare, children, those who are too ill to work, carers, and people with disabilities. In simpler terms, it is a monthly payment that helps with the cost of living. You may be eligible for Universal Credit if you cannot work or have a low income.
It is important to note that Universal Credit replaces the following tax credits and benefits:
- Income Support,
- Child Tax Credit,
- Housing Benefit,
- Working Tax Credit,
- Income-related Employment and
- Support Allowance (ESA), and
- Income-based Jobseeker’s Allowance (JSA).
If you are already receiving any of these, you should be aware of the factors that could influence your Universal Credit payment.
Will Selling Your House Affect Your Universal Credit Claim?
Any income you earn from investments and assets is known as capital. If your capital is between £6,001 and £16,000, it will affect the amount of Universal Credit you receive. For every £250 that your capital is above £6,000, your Universal Credit will be decreased by £4.35 each month.
This reduction will be rounded up if the amount is not a full £250.
If your capital is £6,250 or less, you will lose £4.35 from your Universal Credit until your capital is £6,000 or less. If your capital is £6,000 or less, there will be no deductions from your Universal Credit. However, if your capital is £16,000 or more, you will not qualify for Universal Credit.
Capital disregards are amounts of capital which are not taken into account when calculating Universal Credit. These can include:
- The land or premises where you live,
- Business assets and
- Personal and occupational pensions.
If you would like more information, speak to your coach, since this is not an exhaustive list.
If you receive income from sources other than your regular earnings, it will be treated as unearned income, which reduces your Universal Credit.
This could include student income, pension payments, and training or employment payments made for living expenses or as an alternative to Universal Credit. There are other considerations as well.
You may be subject to deductions from your Universal Credit if you:
- Have a sanction imposed on you
- Have been given a penalty for fraud
- Receive a hardship payment
- Have taken out a Universal Credit advance
- Are repaying a Tax Credit overpayment
- Owe a third-party supplier (e.g. for electricity or gas).
Your Universal Credit allocation could be reduced if you fail to meet the requirements of your commitment and cannot provide a valid explanation.
This is called a sanction. If you are sanctioned, you will be informed of the percentage of your payment that will be deducted.
Does Selling your House Result in Loss of your Housing Benefit?
If you decide to sell your house quickly and receive housing benefits, the government will assume you have earned a good amount of money and no longer need the benefits.
Therefore, when you make a claim for benefits, the local authority will look at the amount you received from the sale of your property in the Land Registry.
It is important to declare any surplus capital you have, as they will expect to see information about this in your records. If there are any discrepancies, be sure to explain them so that it is not assumed you received the entire amount.
If you’re looking to sell your house, you may still qualify for Universal Credit if you meet any of the following criteria:
- You’re unemployed or earn £16,000 or less
- You receive a disability premium
- You have reached the state pension age
- You’re currently living in temporary accommodation
- You’re living in sheltered housing, with alarms and wardens
If none of these apply to you, you can still file a claim for Universal Credit. You can use a benefits calculator to see if you’re eligible.
If you’re still unsure about the impact of selling your property to your UC, it’s best to consult with DWP to help you through the claims process.
If you’re looking for assistance to sell your property quickly and without any trouble, don’t hesitate to reach out to our experienced team. We’re delighted to offer you the help you need!
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