For those relying on benefits, deciding to sell a house can bring uncertainty and concerns. Many ask: if I sell my house can I still claim benefits? The answer depends on the type of benefits you receive and how the proceeds from the sale are treated.
Selling a property can affect eligibility for means-tested benefits, such as Universal Credit, which assess your income and savings. However, non-means-tested benefits, like Personal Independence Payment (PIP), are usually unaffected by changes to your financial situation.
Understanding the rules around property sales and benefits is crucial to avoid unexpected disruptions. Navigating these regulations can be complex, which is why seeking professional advice is often essential.
This article explains how different benefits are impacted by property sales, outlines key exceptions, and provides guidance to help you make informed decisions about your financial and housing future.
Means-tested benefits, like Universal Credit and Housing Benefit, depend on how much money you have. Your eligibility is based on your income, savings, and other things you own, which are called capital.
Capital means savings, investments, and money made from selling a home. If your capital goes over a threshold, your help may go down, and if it goes over the upper limit, you can lose all benefits.
Non-Means-Tested Benefits
Non-means-tested benefits, such as PIP or Attendance Allowance, do not consider your income or savings. These benefits are given based on specific needs, like health issues, and are not affected by selling a home.
Selling a house can significantly impact means-tested benefits, as the proceeds are treated as capital. Each benefit has specific rules regarding how property sale proceeds are assessed.
Does selling a house affect Universal Credit?
Yes, the proceeds are counted as capital, and if your total capital exceeds £6,000, your Universal Credit payments will reduce.
If it surpasses £16,000, eligibility stops entirely.
However, if you’re selling the house to purchase a new home, the proceeds may be temporarily disregarded for up to six months, giving you time to complete the purchase without losing your benefit.
Selling a house can lead to the loss of housing benefit if the proceeds push your capital over the £16,000 limit.
Additionally, owning a second property, for instance if the sale hasn’t been completed or you’re waiting to move, can further complicate eligibility.
Pension Credit
Does selling a house affect pension credit?
For pension-age claimants, proceeds from a property sale are included in the capital assessment. If the total capital exceeds the £10,000 threshold, it may reduce your Pension Credit payments.
However, like Universal Credit, proceeds intended for a new home may be temporarily disregarded under certain conditions.
Personal Independence Payment (PIP)
PIP helps people with long-term health issues or disabilities with daily living or mobility tasks. It does not consider income or assets, so selling your house does not affect your eligibility or how much you receive.
For those still getting DLA, often children or those who haven't moved to PIP, selling a home won't change their support. DLA is based on the individual's health or care requirements, not financial status.
Non-means-tested ESA offers financial aid to people who can't work because of health issues or disabilities. This type of ESA relies on National Insurance contributions and is not influenced by financial conditions, so proceeds from a house sale do not impact eligibility.
In certain situations, the proceeds from selling a property may be temporarily disregarded in the assessment of your benefits. These exceptions are designed to provide flexibility for those reinvesting or using the proceeds for specific purposes.
If you sell a house with the intention of purchasing another property, the proceeds may be disregarded for up to six months under capital disregard rules. This period allows you to use the funds for a new purchase without impacting means-tested benefits. If the purchase takes longer, you can request an extension, but approval is not guaranteed.
When selling a property to pay for care, such as moving into a residential care home, the proceeds are often disregarded. This applies to means-tested benefits like Pension Credit, as the funds are being used for essential care needs rather than retained as savings.
In some cases, the Department for Work and Pensions (DWP) may allow proceeds to be disregarded for a limited time if they are intended for a specific purpose, such as repaying debts or supporting dependents.
Do I Need to Declare a Property Sale to the DWP?
Yes, it’s mandatory to declare any significant changes to your financial circumstances, including a house sale. Failing to do so can lead to serious consequences, including benefit overpayments that you will need to repay, along with possible fines or legal action for non-disclosure.
How to Report a House Sale to the DWP
To report a property sale, contact the DWP directly and provide details of the sale, including the amount received and how you plan to use the proceeds. You may need to supply supporting documents, such as a completion statement or bank statements showing the funds.
Consequences of Non-Disclosure
If you fail to report a sale, your benefits could be stopped entirely. Non-disclosure may also result in penalties, including repayment of overpaid benefits or a reduction in future entitlements.
Working-Age Claimant: Selling a House While Claiming Universal Credit
Jane is a single mother claiming Universal Credit to support her family. She sells her house for £120,000, which significantly increases her capital. Universal Credit allows a capital disregard for six months if Jane plans to buy another property.
However, if she keeps the money for longer than this period, her total capital exceeds the £16,000 limit, making her ineligible for Universal Credit. Jane ensures she reports the sale to the DWP promptly to avoid overpayments.
David, a pensioner, sells his home for £80,000 and moves into a rental property. Pension Credit has a lower capital threshold of £10,000, so the proceeds reduce the amount he receives.
If David were using the funds to buy another home or pay for care, the proceeds might be temporarily disregarded, protecting his benefits.
Disability Claimant: Selling a House and Non-Means-Tested Benefits
Emma, who receives PIP due to a disability, sells her home for £200,000. Since PIP is non-means-tested, the proceeds have no impact on her benefit payments.
She is able to use the money without worrying about affecting her entitlement.
Challenging DWP Decisions
If you believe the DWP has incorrectly assessed your benefits following a property sale, you have the right to challenge their decision. This process, known as a mandatory reconsideration, requires you to request a review of the decision within one month of receiving it.
To strengthen your case:
If the mandatory reconsideration doesn’t resolve the issue, you can escalate your case to a tribunal for further appeal.
Exploring Alternative Financial Support
If your benefits are permanently reduced, consider applying for other forms of support, such as local council schemes, grants, or non-means-tested benefits.
Selling a house can affect benefits depending on the type you receive:
Yes, selling a house can impact Universal Credit. If your total capital, including sale proceeds, exceeds £6,000, payments reduce. If it exceeds £16,000, you lose eligibility entirely. However, proceeds intended for purchasing a new home may be disregarded for up to six months.
Yes, you must declare a house sale to the DWP. Proceeds from the sale are treated as capital and may affect means-tested benefits. Failure to report could result in overpayments, fines, or legal action.
Selling your house can disqualify you from Housing Benefit if proceeds push your capital over £16,000. However, funds meant for buying a new home may be disregarded for up to six months.
Proceeds from selling a house count towards the £10,000 capital threshold for Pension Credit. If your capital exceeds this limit, your payments may be reduced or stopped. Funds used for buying a new home or paying for care may be temporarily disregarded.
No, non-means-tested benefits like Personal Independence Payment (PIP) and Disability Living Allowance (DLA) are unaffected. These benefits are based on specific conditions, such as health needs, not income or capital.
Proceeds may be disregarded temporarily in these cases:
Extensions may be granted in some situations but require DWP approval.
Navigating the complexities of benefits and property sales can be overwhelming. At Tilly Bailey & Irvine, we specialise in providing clear, practical advice tailored to your circumstances. Here's why you should choose us:
Understanding how selling your house affects benefits can be complicated, especially with varying rules for means-tested and non-means-tested benefits. Professional advice ensures you navigate these complexities correctly, avoiding mistakes that could lead to penalties or loss of entitlement.
Tilly Bailey & Irvine’s experienced solicitors can provide the guidance you need to manage DWP reporting, challenge decisions, and protect your benefits. Contact us today on 0333 444 4422 for expert advice and support tailored to your situation.
