UC and two properties questions

We (a couple and 3 children) were on Tax credit and moved to UC with migration letter so received transitional protection. On the time of moving to UC we had two properties (one we were living in and other was on rent with tenants in). UC disregarded the other property for 12 months. When 12 months were about to finish we put the other property on sale and UC gave us 6 months to sell. We had couple of offers but those were low and could not sell the property in provided 6 months. When these latest 6 months were about to expire we created an internal door between these two properties (these two properties were next to each other sharing the wall between them) and started using both properties as one household.
So we informed UC that there were couple of offers but were low, the property is still on sale and in the mean time we have created an internal door between them and using both as one household (main primary house). But UC has closed the claim stating due to have capital more than 16000, we don't have any cash savings it is obvious due to other property they have closed the claim.

I have been reading about UC rules, some where it states that if the property does not sell in 6 months UC can allow another 6 months, but in our case they did not allow another 6 months

Also it states somewhere I read that, they don't take into considerations of your main primary house, in our case since we are using both houses as one household (in other words we have merged two houses into one by creating an internal door), in this case they can not take other house as capital.

I have two options here to fight our case with them, which base is more stronger than the other please.
Option one: I should request them to allow an other 6 months to sell the property since it is still being advertised by estate agent
Option two: In the mean time we have created an internal door and using both as our main primary residence.

Please advise and thank you in advance