Selling home affect benefits

Hi ticktock,
Firstly, whatever happens with your house PIP or DLA will remain unaffected as these are not means tested.
For ESA normally there is a 6 month disregard, however, the decision maker has a discretion to extend this period. This is particularly so when you are looking for a suitable property to accommodate disabilities. Caselaw suggests this would be reasonable, and so would an extension where there is a chain or a purchase has fallen through. The value of your sole property that you live in is always disregarded as capital.
So, I don't think that you need to panic. You have a legitimate reason for selling, and there us another good reason why you can't complete your new purchase.
I think you should contact DWP and explain the above. Probably best to write to them and keep a copy. Explain you needed to downsize to accommodate disability and the proposed purchase fell through and you can not find a new place. You will get 6 months automatically which would start when the contracts are completed and the money is handed over. Tell DWP now, as soon as the sale goes through. Obviously you will need to begin looking for a new property , and perhaps show evidence of this if you need to extend the 6 mth deadline. I would suggest that unless DWP say otherwise, you don't contact them until say 5 mths after the sale, and then request an extension. Keep documents about all your new house sale safely so that you can forward this to DWP if required. I suggest that you investigate whether the solicitor can hold the house proceeds in a client account, assuming this won't cost.This will make it much easier to show the money is for a new house.
If the price of your new house is less than the amount of the sale on the old, it is possible to use the extra money for essential repairs. Again, you will need to get perhaps 3 quotes for the repairs and maybe a report from a surveyor or builder to show that the repairs are necessary.
I have checked the regulations and the extension can be given if reasonable. If DWP doesn't agree, then its decision could be appealed if required.
If you moved in with your brother it would presumably be as a guest or lodger. Your capital would not be considered as his , as you would not be a couple. If you paid rent then this may well affect his pension credit and Housing Benefit if he gets this.
Even if the 6 mth deadline was not extended, you would not lose your capital. You would not be paid ESA. However, as soon as you purchased a new house the capital would be disregarded. So you would be expected to live off the capital in the meantime. If this was only a few weeks or months, it is unlikely that there would be a huge dent in your capital.
For non disregarded capital you are deemed to have £1 of income for every £250 over the £6k threshold. So you can still have £6k to £16k and receive some ESA, but obviously not much if capital is towards the £16 k limit.
Have a word with your solicitor about the house sale. You do not have to cancel this. In any event you may not want to do this as selling a house is always difficult.
I hope this helps.
LL26

Hi ticktock

Think carefully before going into a shared ownership scheme, there is nothing shared apart from the name, you will be liable for any maintenance and you will be restrictive on any work you do to the property and you can be evicted if you miss paying your service charges/rent.

Gary