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Thread: ESA CB House sale, house purchase

  1. #1
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    ESA CB House sale, house purchase

    I wonder if anyone has experience/knowledge of the following:

    I am on contributions based support group ESA (most likely to be reassessed early next year).

    I have just sold my house to find more suitable accommodation re disabilty. I informed DWP of sale.

    I am now looking at several properties but they are more expensive than I expected so I would actually need more than I made from sale of my house to buy.

    My question is: can I borrow money from a relative to help with purchase? Is there a limit? Will it affect entitlement to benefit now - or in future, should I be moved on to e.g. wrag income-related ESA?

    I have looked at some of the DM documents online at gov.uk but totally confused! Any clarification appreciated, esp. re where I can find definitive information in their documents.

    Thanks in advance

  2. #2
    Senior Member nukecad's Avatar
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    As you are on Contributions Based ESA then any savings or capital you have make no difference at all to your ESA paymnts.

    Even if you were on IR ESA then money from the sale of a main home is disregarded for 6 months (which can be extended in some circumstances) while you purchase another home.
    Borrowing money to help purchase a new home would also be disregarded for IR ESA, as long as you did use it to by a home.

    In all cases your main home is not counted as capital for benefit purposes.

    You have done the right thing by informing the DWP, although as you are on CB ESA then you did not realy need to.
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  3. #3
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    Hello Nukecad

    Thanks so much for that information.

    Would it matter how much I borrowed from my relative? I expect the way it would work is that the money wouldn't be given directly to me but be paid directly by my relative to the seller of any house I manage to buy, with the remainder being paid by me from the money I have from the sale of my previous home. I would own the home. It would therefore show up in some kind of completion statement. Am assuming I would I need to show this to DWP even though, as you imply, it would'nt affect my CB ESA but best practice to keep them informed?

    I would hope to be paying at least some of the money back so should I be getting a legal document drawn up to show this is a loan or does this matter at all for DWP purposes?

    I would also have to use some of my own modest savings for any adaptations. I assume this will not affect anything? Will I have to tell the DWP of anything I spend from savings (which they already know about)

    Thanks again in advance

  4. #4
    Senior Member nukecad's Avatar
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    Again as you are on CB ESA it does not matter at all.
    Just to be clear you are only getting CB ESA, you don't have an IR top-up?
    (For example if you get the Severe Disibility Premium of £62 on your ESA then you have an IR top-up).

    But to take a hypothetical case that you were in fact on IR ESA then-

    If the money is used to purchase a dwelling that is to be your main home, and the new home is a reasonable size for your needs, then it generally does not matter how much it is, where it came from (Bank, relative, other), or under what terms (loan or gift).

    Of course if you left another home then that one, or money from the sale of it, would become capital.
    Unless also reinvested in the new home - just like your are proposing.

    There would be a problem with IR benefits if, say, you got a large inheritance, or a large gift, or won the Lottery, and used the money to move from a one bedroom flat and buy a mansion you didn't realy need, and then tried to keep claiming IR benefits.
    (You would have commited "Deprivation of Capital with a view to Claiming or Increasing Benefits", in other words benefit fraud).

    But you are hardly likely to take a loan to do that if you are on IR benefits, for one thing you wouldn't be able to afford the repayments.

    There is no definitive information as such, there are no set limits on monetary amounts in all this, it's more a question of what is considered 'reasonable' in each case.
    (ie. if you need an adapted property it is reasonable that it would be more expensive than your old, unadapted property).

    The decision about what is 'reasonable' would be taken by a DWP Decision Maker with help from the DM guidance, and like any decision could be challenged.

    But as said, all that is hypothetical because you are on CB ESA and capital held does not affect CB benefits. It is only Income Related benefits that are affected by capital.


    It's up to you if you tell the DWP any more or not.

    To be honest I wouldn't, if your are not getting any IR benefit (or IR top-up) then you don't need to.
    They get used to people not telling them things when they should, so if you tell them things they don't need to know then it just confuses them and then they do daft things.

    PS.
    If you are getting a loan from a relative, then definitely get a contract drawn up saying how much it is for, what it is to be used for, when it is to be given to you, when and how you are supposed to pay it back (if ever), if the relative has any claim against the property if you predecease them, what happens if they predecease you, etc., etc.
    You might want to see a solicitor about all this.
    Basically look at it as if you have used the money from your old home as a deposit, and have taken out a private mortgage from your relative for the rest of the pruchase price. (Whether you actually make any payments on the loan/mortgage is between the 2 of you, and should be written down in the contract).

    It's then there in black and white if you ever need proof of what was agreed. eg. if you need to show it to anyone, the DWP say, ten years from now.

    Verbal arangements, especially between relatives, usually come back and bite you on the bum at a later date, just watch Judge Rinder on TV one afternoon to see some examples and have a good laugh.
    Last edited by nukecad; 01-05-17 at 22:11.
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    I seem to have deleted one of my posts!

    Don't think I get the IR top-up.

    Yes will definitely be getting a legal agreement sorted!

    The post I deleted said something along lines: have sold 2 bed and the suitable house is also 2bed but has downstairs bathroom and parking I need. But unfortunately it's in a more expensive area hence will need to borrow.

    My worry is suppose is if I was reassessed next year and got moved onto ESA IR, would the DWP be able to somehow retrospectively look at any money I borrowed and count it as notional or deprivation or whatever it's called and so disallow any claim

    Thanks

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    Think I deleted another post: to clarify I do get Disability Income Guarantee but I 'lose' it because of savings

  7. #7
    Senior Member nukecad's Avatar
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    Your post may have just gone to moderation, the moderation filters here are set to be quite strong, especially at weekends.
    It happens to us all at times, we put up with because it keeps disability-bashing and benefit-bashing trolls off the forum.
    The moderators here only work office hours, so your 'missing' post may show up sometime tomorrow.

    If you are entitled to that disability premium then you do have an IR top-up entitlement, you only get the disability premiums with an IR entitlement.

    The 'Disability Income Guarantee' is what the DWP put in letters to refer to the "Enhanced Disability Premium".
    It is paid automatically when you are in Support Group on IR ESA, or Support Group on CB ESA with an IR top-up entitlement.

    Unfortunately as you have found any savings over £6K will reduce payment of IR benefits, each extra £250 savings over £6K will knock another pound off, until at £16K savings IR payments stop altogether. (So £10K savings would wipe out that particular disability premium).

    As you already 'lose' payment of that premium because of your savings then any more capital will still not make any difference, you've already 'lost' it.

    The house change sounds 'reasonable' to me if you require the downstairs bathroom (and parkig) because of your condition(s).

    Even if you somehow got reassessed to WRAG next year then it would still not make any difference for 4 reasons:

    1. Presumably you have not been in WRAG before, so you should still have 52 weeks CB WRAG before you had to change to Income Related.
    2. Even if you did change straight to Income Related WRAG, by that time the money would have been spent to buy your main home, which is disregarded for IR benefit.
    3. To be deprivation you have to do it in order to "claim or increase benefit", you can't have been reasonably expected to know in advance that they were going to change you to Income Related, you have to reasonably assume that if reassessed you would still be in SG, or still have 52 weeks CB even if changed to WRAG.
    4. The clincher - When all is said and done you have not in fact deprived yourself of capital, by taking the loan you have actually increased your capital. (Although being in the form of your main home it is disregarded for benefit purposes).


    So all in all what you are proposing looks fine to me, as far as your ESA payments go it should not make any difference.
    Last edited by nukecad; 02-05-17 at 00:47.
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    Just a quick follow-up question/clarification re above.

    Unfortunately I've had difficulty finding suitable accommodation and it's now been 6 months (which I understand is the usual amount of time you have if you're on IR ESA to buy a new home with money from sale of a house).

    As stated previously I'm on CB ESA but should I tell DWP I've still not been able to find suitable accommodation now that 6 months has passed? Just worried about scenario if/when they reassess (early next year?) they might take me out of support group put me on IR or whatever and then they'll start to count the money from sale of house as savings? If that makes sense.

    Thanks in advance.

  9. #9
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    If you are currently not receiving any Income Related benefits, including housing/CT benefit, then there is no need to inform them of anything. It is only if/when you apply to receive those (IR) benefits that you will need to explain your financial situation (via form ESA3).

  10. #10
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    I agree with Jard.

    The 6 months disregard can be extended in certain circumstances and finding a house suitable for your disabilities would be a good reason for the time limit to be extended.

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