Does Money From House Sale Affect Universal Credit Benefits?

It’s no surprise that you have questions if you’re selling your house while claiming Universal Credit. The last thing you’ll want is for the sale to have an impact on your eligibility or, worse still, stop your payments altogether.

Let’s dive into our quick guide to how house sales can affect Universal Credit claims in the UK and what you can do about it if you want to sell while protecting your benefits at the same time.

Table of Contents

• At a glance: Universal Credit and property ownership

• How does property affect Universal Credit?

• Can you sell a house while on Universal Credit?

• How to sell your house while on Universal Credit

At a glance: Universal Credit and property ownership

Universal Credit in the UK is a social security benefit that’s designed to help people who are on low incomes or out of work. Of course, those people can still live in and buy and sell houses, so it’s important to understand how the two things can affect one another.

In short, selling your house won’t affect a claim for Universal Credit, but the capital (the money) you gain from it might—this is because the money from the sale is one of the considerations for benefit eligibility.

This depends on certain thresholds set by the government because Universal Credit is a means-tested benefit. The Department for Work and Pensions (DWP) will classify the money you get from any sale as capital that needs to be taken into consideration.

• Capital of £6,000 or less will not affect your Universal Credit

• Capital between £6,001 and £16,000 might result in reduced payments (calculated at every £250 interval above £6,001)

• Capital of £16,000 or more will make you ineligible for Universal Credit and you’ll typically lose your entitlement to it

There’s a range of scenarios that might change your eligibility—let’s take a look in more detail.

How does property affect Universal Credit?

Owning property on its own doesn’t affect your Universal Credit. If you own a house and it’s your main residence, you don’t need to worry about it counting towards any credit assessments when it comes to eligibility. It’s the sale of property or ownership of more than one property that could change things for you.

Does property count as savings for Universal Credit?

Owning more than one property will count as capital with the DWP, especially if you rent it out and gain an income from it. If you are not the legal owner of the property, but you have a beneficial interest in it, then this will still count as capital when considering any entitlement to Universal Credit (check Section 47 of the Universal Credit Regulations 2013 for more info on that).

Claiming joint credit with a partner will lead to your combined capital being considered, so make sure you know where you stand before you make any decisions on selling your property fast. The best route forward is to seek legal advice from a specialist solicitor or Citizens Advice.

Read more: How capital affects Universal Credit (Shelter)

Can you sell a house while on Universal Credit?

So, yes, it is possible to sell a property while you’re claiming Universal Credit—the benefit is there to help people, so you won’t be forced to sell your home in order to claim it or remain eligible for it.

When you sell your home, the proceeds you get from it will affect your entitlement, as outlined above. However, this depends on what you intend to do with the capital you’ve gained. If you plan to purchase another property to use as your main residence within the 26-week grace period as defined by the DWP, the money from the initial sale will likely not be counted towards your capital limit.

This grace period means you can transition between homes without negatively affecting your Universal Credit. It’s best to try to complete the purchase within that time to benefit from this exemption—otherwise, the capital may be counted by the DWP.

Do I need to tell the DWP if I sell my house?

The above means it’s important to keep your claim for Universal Credit updated—you need to tell the DWP if you sell your house, which you can do in your online account on the government’s website.

Basically, if there’s a change to any circumstances that affect your eligibility criteria, the DWP needs to know about it. This way, you’ll be able to avoid any issues with receiving more (or less) than you’re entitled to from the DWP.

To be on the safe side, just keep them updated about your plans. If you plan to buy another property within the grace period, contact the DWP at the start of that grace period (or as close to it as you can, when you know what those proceeds might look like).

Insofar as a homeowner’s Universal Credit is concerned, most house sales fall into a few typical scenarios that are assessed using the DWP’s thresholds above. Here are some examples: 

The most important point to remember is whether or not you intend to make money from a house sale, especially if it takes your capital to more than £16,000. This includes profit from the sale itself, any savings and any rental income that may come from a subsequent property you buy after the 26-week grace period.

Selling your home won’t stop your Universal Credit payments if you’re still under the threshold, so tactics like flipping houses might not be the best way forward on account of how high-risk it is in today’s housing market. Again, seek legal advice if you are looking into selling for such reasons.

How to sell your house while on Universal Credit

You have a few options when it comes to selling your house—the route that’s best for you to take will depend on what you want out of it.

If you want to get as close to or possibly above 100% market value for your property, you’ll probably be best off selling on the open market via an estate agent. This path can take a lot longer than most methods and might be more likely to affect your Universal Credit claim if you receive significant proceeds from the sale.

If you want a quicker sale and you don’t mind paying higher fees, you might look at selling your house at an auction. There’s no guarantee that the house will sell, of course, but you could find the right buyer at the right auction within 10 weeks or so.

If you want any even quicker sale and you don’t want to pay any fees (not even legal fees), you might opt for a cash buyer like The Property Buying Company. We buy houses quickly and get you as close as we can to market value while sorting all your fees for you—we might even be able to buy your home as quickly as seven days. 

It’ll be less hassle and faster access to any cash you might need to help you and your family. Here’s a comparison of the options for selling your home and how they might affect your Universal Credit: 

If you want extra peace of mind, you can take a look through our customer stories and thousands of Trustpilot reviews to see what selling to a cash buyer could do for you. Why not get in touch today for your free cash offer?