Housing benefit when renting house to relative


L

Layezee

I've got another house which I'm renting out at the moment, after moved in
with my partner. I want my elderly mother to move into it as it is closer
to where I live (over 200 miles closer) and I'm fed up having dodgy tenants.
However, she claims housing benefit and I know that local authorities are a
bit sniffy when it comes to paying out housing benefit when the property is
being rented out to family and claiming benefit. However, I could not
afford for her to live in the house rent free, so I'm in a bit of a catch 22
situation.

Can anybody confirm whether there are ways around this issue? Do I need to
draw up a proper and legal tenancy agreement to make it look like a proper
business transaction (which it is). Do I get my mother to change her name
so the local authority don't think we're related. Should I put my partner
down as landlord, even though I actually own the house?
 
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R

Robbie

Layezee said:
I've got another house which I'm renting out at the moment, after moved in
with my partner. I want my elderly mother to move into it as it is closer
to where I live (over 200 miles closer) and I'm fed up having dodgy tenants.
However, she claims housing benefit and I know that local authorities are a
bit sniffy when it comes to paying out housing benefit when the property is
being rented out to family and claiming benefit. However, I could not
afford for her to live in the house rent free, so I'm in a bit of a catch 22
situation.

Can anybody confirm whether there are ways around this issue? Do I need to
draw up a proper and legal tenancy agreement to make it look like a proper
business transaction (which it is). Do I get my mother to change her name
so the local authority don't think we're related. Should I put my partner
down as landlord, even though I actually own the house?
Firstly don't go down the road of getting your mother to put
information down which isn't correct. If she gets caught out (and she
will for both your suggestions, believe me) then she'll only attract
the attentions of the fraud section when it's totally unnecessary.

It's legal to rent out a property to close relatives and as long as
it's a commercial agreement (so a properly drawn up tenancy agreement
is a sensible move) then there will be no problem. The HB department
are used to people renting from sons, parents etc. The only guiding
principle is simply this: if your mother defaulted on her rent payments
would you enforce the tenancy agreement and evict her. If yes, then
it's a commercial agreement (ie you're treating her the same as any
other tenant).

Robbie
 
A

anthonyberet

Layezee said:
I've got another house which I'm renting out at the moment, after moved in
with my partner. I want my elderly mother to move into it as it is closer
to where I live (over 200 miles closer) and I'm fed up having dodgy tenants.
However, she claims housing benefit and I know that local authorities are a
bit sniffy when it comes to paying out housing benefit when the property is
being rented out to family and claiming benefit. However, I could not
afford for her to live in the house rent free, so I'm in a bit of a catch 22
situation.
It sounds like you are a textbook example of a related landlord whose tenant
would be entitled to HB.
They will check fairly closely, but if you supply your usual tenancy
agreement, and make it clear that you would have to evict your mum if she
didn't pay, and that you normally let out the property then you will be ok.
Can anybody confirm whether there are ways around this issue? Do I need to
draw up a proper and legal tenancy agreement to make it look like a proper
business transaction (which it is). Do I get my mother to change her name
so the local authority don't think we're related. Should I put my partner
down as landlord, even though I actually own the house?
Don't attempt to falsify anything - that only leads to major delay for
people in your situation.
You don't technically need a written tenancy agreement but it will certainly
help the claim through if you have one.
 
L

Layezee

It sounds like you are a textbook example of a related landlord whose
tenant
would be entitled to HB.
They will check fairly closely, but if you supply your usual tenancy
agreement, and make it clear that you would have to evict your mum if she
didn't pay, and that you normally let out the property then you will be
ok.

Don't attempt to falsify anything - that only leads to major delay for
people in your situation.
You don't technically need a written tenancy agreement but it will
certainly
help the claim through if you have one.
Thanks for your comments - is it worth writing to the local authority first,
to clarify their position before proceeding? At least I can get their
comments before proceeding down that route and avoid any long term issues,
although I don't really want to give them lots of time for them to think of
a reason for not allowing it.
 
D

Doggie

They will check fairly closely, but if you supply your usual tenancy
Does this mean that I could buy my mothers house and then rent it back to
her and get the HB to pay for it?
 
M

Martin Davies

Doggie said:
Does this mean that I could buy my mothers house and then rent it back to
her and get the HB to pay for it?
Hmmm.....would she be classed as having a load of capital then?

Martin <><
 
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K

Kamina

Martin said:
mum if
she

Hmmm.....would she be classed as having a load of capital then?

Martin <><
Nice try but .......

7. Circumstances in which a person is to be treated as not liable to
make payments in respect of a dwelling

(h) he previously owned, or his partner previously owned, the dwelling
in respect of which the liability arises and less than five years have
elapsed since he or, as the case may be, his partner, ceased to own the
property, save that this sub-paragraph shall not apply where he
satisfies the appropriate authority that he or his partner could not
have continued to occupy that dwelling without relinquishing ownership;
 
M

Martin Davies

Kamina said:
Nice try but .......

7. Circumstances in which a person is to be treated as not liable to
make payments in respect of a dwelling

(h) he previously owned, or his partner previously owned, the dwelling
in respect of which the liability arises and less than five years have
elapsed since he or, as the case may be, his partner, ceased to own the
property, save that this sub-paragraph shall not apply where he
satisfies the appropriate authority that he or his partner could not
have continued to occupy that dwelling without relinquishing ownership;
Thanks for that.
I was asking the question honestly.

Martin <><
 
A

anthonyberet

Doggie said:
Does this mean that I could buy my mothers house and then rent it back to
her and get the HB to pay for it?
Probably not - as the former owner she would have to show that she had
to sell it in order to continue living there, at least for 5 years.
It is also unlikely that you could argue that you had a commercial
relationship with her.
The regs are intended to prevent that kind of abuse.
 
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A

anthonyberet

Layezee said:
Thanks for your comments - is it worth writing to the local authority first,
to clarify their position before proceeding? At least I can get their
comments before proceeding down that route and avoid any long term issues,
although I don't really want to give them lots of time for them to think of
a reason for not allowing it.
it would be worth writing the council to ask for a pre-tenancy
determination.
This will *not* tell you absolutely that they will allow the claim (they
will not confirm this until a claim is actually made), but it will tell
you if the HB would be limited by the rent officer, in your mums case.
- This is worth doing if you want to avoid any surprises.

As for clarity of the position - what I said before really is all there
is to it, as far as comerciality is concerned. - She isn't responsible
for your child is she? - that would dissallow her under different regs.
Also, I assume she didn't own the property within the last 5 years?
Check these guidance notes from the DWP and the actual regs. They should
put your mind at rest (its a rather confusing read, but it is all here):

http://www.hbinfo.org/menu3/gm2003/a3_2003.shtml#331

http://www.hbinfo.org/menu2/pchbregs/007.shtml
As for reg 7 - your case all rests on paragraph 1(a), from what you have
said.
The test for a commercial basis is that you usually let the space, and
that you would have to evict if the rent is not paid.
 

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