The Department for Work and Pensions (DWP) has confirmed updated guidance on how property ownership is assessed for Pension Credit and other means-tested benefits.

The State Pension itself is not affected. However, the clarified rules could influence entitlement to additional support such as Pension Credit, Housing Benefit, Council Tax Reduction and Support for Mortgage Interest (SMI).

For most pensioners who live in their own home and own no other property, the main residence remains protected.

Why the DWP Has Updated Property Guidance

The DWP says the updated approach is designed to:

• Ensure fairness in means-tested assessments
• Reflect rising property ownership among pensioners
• Focus support on those with the lowest overall resources
• Strengthen checks against asset transfers

The changes are primarily clarifications and tighter enforcement, rather than the introduction of a new tax or compulsory sale policy.

Which Benefits Are Affected?

The updated rules relate to means-tested support, including:

• Pension Credit
• Housing Benefit (where still applicable)
• Council Tax Reduction
• Support for Mortgage Interest (SMI)
• Certain disability-related top-ups

The New State Pension and Basic State Pension are not means-tested, so they are unaffected by property value assessments.

Is Your Main Home Still Protected?

Yes.

The DWP has confirmed that your main residence is still disregarded when assessing capital for Pension Credit and similar benefits.

This applies if:

• You live in the property as your primary home
• You have not permanently moved out
• Ownership has not been transferred

Pensioners will not be required to sell their main home simply to qualify for support.

When Could a Property Be Counted?

Complications arise if:

• You own a second home
• You rent out an entire property
• You move permanently into residential care
• You transfer ownership or equity
• The property is no longer your main residence

In these cases, the property’s net value (market value minus mortgage) may be treated as capital.

Second Homes and Buy-to-Let Properties

Pensioners with additional properties face stricter scrutiny.

Second homes, holiday properties and rental investments are usually:

• Counted as capital
• Included in savings assessments
• Subject to valuation checks

If total capital exceeds benefit thresholds, Pension Credit entitlement may reduce or stop entirely.

Temporary disregards may apply if the property is actively being sold, but these are time-limited.

Renting Out Part of Your Home

If you rent out a room:

• The property usually remains your main residence
• Rental income is normally counted as income
• Certain expenses may be deducted

Failing to declare rental income could result in overpayment recovery or penalties.

Deprivation of Assets – Stronger Enforcement

The DWP has reinforced its approach to deprivation of assets.

If a pensioner:

• Transfers property to relatives
• Gifts equity before applying for benefits
• Sells property below market value

And the intention is deemed to secure or increase benefit entitlement, the DWP may treat the person as still owning the asset.

There is no fixed time limit. Decisions are based on intent, timing and circumstances.

Support for Mortgage Interest (SMI)

For pensioners still paying a mortgage, SMI remains available — but as a loan, not a grant.

Key points:

• The loan must be repaid when the property is sold
• Interest accrues over time
• It is secured against the property

SMI can provide short-term relief but reduces the estate’s value.

Impact on Pension Credit Claimants

Pension Credit is the benefit most closely affected by property assessments.

Claimants should:

• Declare all property interests
• Update DWP about ownership changes
• Keep records of valuations and mortgages

Failure to disclose additional property could result in repayment demands.

At the same time, many eligible pensioners still do not claim Pension Credit at all.

Care Costs and Property

Although separate from DWP benefits, property value can also affect local authority care assessments.

If a spouse or qualifying relative lives in the property, it is often disregarded.

If the property becomes unoccupied, councils may include it when calculating care contributions.

Independent financial advice is strongly recommended in these situations.

What Pensioners Should Do Now

If you own only your main home and have no additional property, you may not need to take action.

However, if you have:

• A second property
• Rental arrangements
• Recent ownership changes
• Plans to transfer equity

You should seek independent advice before making decisions.

Free support is available through:

• Citizens Advice
• Age UK
• Local authority welfare teams

Will Further Changes Happen?

The DWP has indicated that housing wealth and means-testing will remain under review as demographics shift and public finances evolve.

Any major structural changes would be formally announced in advance.

FAQs

Is the DWP forcing pensioners to sell their homes?

No. Your main home is still disregarded for means-tested benefits if you live in it.

Does owning a second home affect Pension Credit?

Yes. A second property is usually counted as capital and may reduce entitlement.

What is deprivation of assets?

It is when assets are deliberately transferred to qualify for benefits. DWP can still assess you as owning them.

Is the State Pension affected?

No. The State Pension is not means-tested.

Does rental income count?

Yes. Rental income must be declared and may affect benefit entitlement.

What about Support for Mortgage Interest?

SMI is available as a repayable loan secured against your property.