I have a client whose property has now gone into negative equity, he is in receipt of Pension Credit who are currently meeting mortgage payments, he wants to move in with family member and rent out his property to try to clear some of the debt. Have advised him that mortgage payments will stop if he no longer lives in the property but have become confused about how rental income will be taken into account. Have looked at CPAG which states rent from a property other than your home is not taken into account as income, instead the value of the property would produce a deemed income(in this case this would be nil), the DMG seems to agree with this, however I have been advised by the Mortgage Section at the Pensions Service that any rental income above the mortgage payments would be treated as income and the processing section has said they will not even disregard the mortgage repayments but will treat all the rent as income. Have now become very confused. Is it Capital or Income??

My view - For Pension Credit the property is not disregarded, it is a capital asset which currently has no capital value, so a deemed income would be taken into account, and actual income would be ignored. In your case the deemed income is nil, and the rental income should be ignored and so enable the client to meet mortgage liabilities. That's how I read it anyway.

I think the advice from the Mortgage section is wrong. Also the Processing section are wrong.