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Effect of Universal Credit on house prices

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So I was reading into UC and it can't be claimed if savings of more than 16k. The old tax credit system didn't have that.

Yet who can buy a house with 16k sayings, even with help to buy?

That's got to hit affordability levels. The roll out may be slow and delayed, but it is happening. more and more people are coming under UC even if its just moving to another authority area.

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You can of course buy a property with a deposit of 16k, as long as you can meet the multiple. 

AIUI the most significant aspect of UC is that all part-time workers bar a very small percentage are obligated to look for full-time hours, and are pretty much treated the same as the unemployed in this respect, ie they face benefits sanctions if they are seen not to be complying. 

 

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There's a lower threshold of £6k, and an upper threshold of 16k. Over 16k and you can't claim at all and I believe for every £250 in savings above the £6k lower threshold the persons UC payment will go down by £4.32 a month. 

The effects of this are fairly short term I.E you spend  your savings until they are low enough to claim. The reduction is only around £200m a year so I doubt the savings issue will have much impact.

As @Fletcher says the work search requirements are a big one. It requires a large group of people to search for extra hours who have never had that requirement.

Other effects I can see

1) Landlords leaving the lower end of the rental-sector due to tenant non-payment/ UC delays/UC sanctions etc.

2) Many claimants with a "bad back" or "anxiety and depression" will lose their ESA benefits. You can now only get an extra payment/not search for work if you are both unfit for work AND unfit for preparing for work.

3) It's clear that people are struggling with the new system, It is less generous than before for many people and the level of delay some people are having will no impact on consumer spending.  

This site has a breakdown of the "winners and losers" under the new system.

https://www.entitledto.co.uk/blog/2018/october/winners-and-losers-under-universal-credit-a-bit-more-detail/

 

Edited by Council estate capitalist

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£16k of savings won't get a deposit in most of the country. Not even 10% of a 200k place which rules out pretty much all the south and much of the north.

It basically stops any UC claimant being able to save enough for a home at current prices. I guess people will stash it.

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Not  UC, which  is more an attempt to return benefits to some sort of sanity.

The issue is the number of under 50s on TCs - see tax credit sad face...

Even in the supposed 'booming' south', Id guess most towns have 30-50% of familieson TCs.

These people are never going to get a mortgage at anything like the prices being listed.

For TCs, the kids grow up, the TCs stop, and mam n dad re-enter the work force at 45ish, with nothing to show for th last 20 years 0- no skills, no savings, no pension.

Chuck i nthe decimation of the finsec and the South is in big trouble.

Despite the EAs claims the housing market is driven b ythe under 50s and their access to credit.

 

 

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TC has helped the bubble going along with all the other props. Is there a number of people now on UC? I know tax credits payout are down a few billion in the past couple of years. Havn't got the data to hand but was HMRC data.

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Looks like can still keep it for a year.

How your savings are affected if you move from Tax Credits to Universal Credit

The government is proposing if you have over £16,000 in savings, you would normally not qualify for Universal Credit. But, if you’re moving from Tax Credits to Universal Credit, anything you have over the £16,000 limit will be disregarded for 12 months from the point you move to Universal Credit. After 12 months, the normal rules apply. Final details are yet to be confirmed.

https://www.moneyadviceservice.org.uk/en/articles/how-do-savings-and-lump-sum-pay-outs-affect-benefits

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I know of three separate recent-ish incidents of wives who have walked out from their husbands and taken the kids with them. All are highly dependent upon benefits (two have started their own small businesses). One of them is demanding her share of the equity from the former family home, forcing the ex-husband to sell up. Presumably if that share is more than £16k, then under UC she needs to put it towards buying a house asap or lose all her benefits?

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2 minutes ago, rantnrave said:

I know of three separate recent-ish incidents of wives who have walked out from their husbands and taken the kids with them. All are highly dependent upon benefits (two have started their own small businesses). One of them is demanding her share of the equity from the former family home, forcing the ex-husband to sell up. Presumably if that share is more than £16k, then under UC she needs to put it towards buying a house asap or lose all her benefits?

Yes.

 

Normally, the woman stays in the marital -as most are successful at claiming being the primary care giver.

Except in cases where the woman runs off with someone else.

 

 

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26 minutes ago, sf-02 said:

TC has helped the bubble going along with all the other props. Is there a number of people now on UC? I know tax credits payout are down a few billion in the past couple of years. Havn't got the data to hand but was HMRC data.

Its moer complex.

TCs and IO mortgages have helped a lot of Southern households tickover after he huge loss of Finsec jobs.

The problem is - then what?

There's no jobs offering anything close to allowing houses to be bought at their current level.

Every year that goes by, the kids get closer to 18.

Mortgage position just held, nothing paid off.

No skills aquired, no pension benefits accumulated

.

The end result is obvious - yougnest reaches 18, TCs stop, parent/s on JSA, has to work 2 x NMW jobs to stand still., IO mortgage terms expires (normally 15 years) all crashes down.

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14 hours ago, sf-02 said:

So I was reading into UC and it can't be claimed if savings of more than 16k. The old tax credit system didn't have that.

Yet who can buy a house with 16k sayings, even with help to buy?

That's got to hit affordability levels. The roll out may be slow and delayed, but it is happening. more and more people are coming under UC even if its just moving to another authority area.

Even JSA and ESA was means tested above 16K. You could claim contribution based ESA or JSA -  that wasn't means tested if you had worked and built up enough NI contributions, but once you are on benefits for so long your NI runs out and you can no longer claim. ESA  lasts only a year in that case. In areas with universal credit you can still claim contribution based JSA etc, they call that 'new style JSA'. I don't see much difference for house prices apart from those in areas where a lot of BTL is renting to those on benefits and the rents will fall since the tenants have less benefit income. Falling BTL demand and landlords selling up leads to lower house prices:-)

Edited by bear.getting.old

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1 hour ago, rantnrave said:

(two have started their own small businesses)

There's a reason the average self-employed earnings for a women is only  £9,800 (2014). They have tried cracking down on it but up until UC came it it was easy enough to put down "Avon seller", "Babysitter", "Jewellery making" etc on the forms and get full tax credit.  

 

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I know of someone,single mother has her own house and a buy to let.She is absolutely doing her nut about universal credit coming in.She works part time sort of as and when.She obviously now gets tax credits but when her area goes to universal credit she will get nowt as she owns a second house.

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I understand there is/was a scam with UC to do with pensions.

UC takes into account full pension contributions. That is a lower rate TP could pay £100 into their pension and this counts as £100 lower income. The UC taper rate being 63% means they get £63 UC back. So only really pay £37 net. But get, after pension income tax rebate on a high street SIPP, £125 into their pension. I make that a 3.5x multiplier for pension contributions for people on UC, unless I've missed something.

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35 minutes ago, poohbear said:

I know of someone,single mother has her own house and a buy to let.She is absolutely doing her nut about universal credit coming in.She works part time sort of as and when.She obviously now gets tax credits but when her area goes to universal credit she will get nowt as she owns a second house.

Interesting, I'm trying to get my head around how this works. I assume she's not making a huge amount on the rent (less mortgage interest) hence being able to get TC.

If this is the case I would have thought s24 (removal of mortgage interest relief) would have already hit her because her "taxable income" would technically gone up.

Either way UC will mean she gets nothing.

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1 hour ago, poohbear said:

I know of someone,single mother has her own house and a buy to let.She is absolutely doing her nut about universal credit coming in.She works part time sort of as and when.She obviously now gets tax credits but when her area goes to universal credit she will get nowt as she owns a second house.

The good news keeps on coming.

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3 minutes ago, Council estate capitalist said:

Interesting, I'm trying to get my head around how this works. I assume she's not making a huge amount on the rent (less mortgage interest) hence being able to get TC.

If this is the case I would have thought s24 (removal of mortgage interest relief) would have already hit her because her "taxable income" would technically gone up.

 

Tax credits are exempt from s24 changes.

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8 minutes ago, Si1 said:

I understand there is/was a scam with UC to do with pensions.

UC takes into account full pension contributions. That is a lower rate TP could pay £100 into their pension and this counts as £100 lower income. The UC taper rate being 63% means they get £63 UC back. So only really pay £37 net. But get, after pension income tax rebate on a high street SIPP, £125 into their pension. I make that a 3.5x multiplier for pension contributions for people on UC, unless I've missed something.

That makes sense. Highly worthwhile for someone who's only a few years off being able to pull the money out of the SIPP.

1 minute ago, Si1 said:

Tax credits are exempt from s24 changes.

Interesting, I guess as TC's are being phased out there's really no need to mess with the TC reg's when they'll be obsolete anyway. 

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8 hours ago, spyguy said:

Yes.

 

Normally, the woman stays in the marital -as most are successful at claiming being the primary care giver.

Except in cases where the woman runs off with someone else.

 

 

That is very much not the case. 

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32 minutes ago, Fletcher said:

That is very much not the case. 

90% family home goes to the kids primary care giver.

Standard, accepted rules.

If no financial settlement reached then house is sold when youngest leaves eduction, then split 50 50.

 

 

 

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1 hour ago, spyguy said:

90% family home goes to the kids primary care giver.

Standard, accepted rules.

If no financial settlement reached then house is sold when youngest leaves eduction, then split 50 50.

 

 

 

Yes indeed but my point was aimed at the quoted text in italics. 

 

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17 minutes ago, Fletcher said:

Yes indeed but my point was aimed at the quoted text in italics. 

 

Ah ok.

Its rare for a eoman with kids to run off.

From the cases ive seen the tend to carry on til hubby leaves or she gets him thtown out.

Only time ive seen woman run away was when they were running to richer bloke.

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3 hours ago, Council estate capitalist said:

Interesting, I'm trying to get my head around how this works. I assume she's not making a huge amount on the rent (less mortgage interest) hence being able to get TC.

If this is the case I would have thought s24 (removal of mortgage interest relief) would have already hit her because her "taxable income" would technically gone up.

Either way UC will mean she gets nothing.

I think the btl has no mortgage on,just her own home.She is looking to stop working as well not work more.She is coming to the conclusion that she will need to sell the btl.

 

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On 12/04/2019 at 17:50, poohbear said:

I know of someone,single mother has her own house and a buy to let.She is absolutely doing her nut about universal credit coming in.She works part time sort of as and when.She obviously now gets tax credits but when her area goes to universal credit she will get nowt as she owns a second house.

GOOD.

Please keep us informed :)

Quote

She is looking to stop working as well not work more.She is coming to the conclusion that she will need to sell the btl.

If she stops working, that's up to her - as long as she's not claiming benefits from us tax-payers.

If she sells the BLT, double win - that's another house hopefully out of the PRS and back into ownership.

 

Edited by mrtickle

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On 13/04/2019 at 18:56, mrtickle said:

GOOD.

Please keep us informed :)

If she stops working, that's up to her - as long as she's not claiming benefits from us tax-payers.

If she sells the BLT, double win - that's another house hopefully out of the PRS and back into ownership.

 

Oh I doubt she will get enough in benefits to keep the ball rolling if she does give up work.

It will be work more or sell the btl.She can’t be the only single mother with a btl.

I know she hates working and at being in her 50’s has not got a pension,think the house will go.

 

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